Gold and Silver Pullback Continues After Historic Crash; Warsh Fed Nomination in Focus

 

Gold and Silver Pullback Continues; Warsh’s Fed Nomination in Focus

(Bullion News Network) – Gold and silver prices continued to fall on Monday, extending their losses after a historic crash last Friday. The spot price of silver led the way once again, shedding approximately $5.66 per troy ounce to fall below $80/ozt. Gold also saw another major loss, pulling back by more than $225 per troy ounce. The price action favored gold, driving the gold-silver ratio over one point higher. The move comes less than a week after both metals set fresh all-time highs; gold crossed $5,500 per troy ounce as silver peaked at more than $120/ozt before prices collapsed on Friday.

Last week’s crash followed President Trump’s decision to nominate Kevin Warsh to succeed Jerome Powell as the Chairman of the Federal Reserve. Warsh, who served as a governor on the central bank’s board during the 2008 financial crisis and its aftermath, is widely considered a hawkish pick on inflation who is likely to argue against large asset acquisitions by the Federal Reserve. Some analysts believe Warsh could push back against Trump’s demands to cut interest rates rapidly. Precious metals like gold and silver tend to decline in value as interest rates rise, since these safe haven assets are not interest-bearing. Warsh’s nomination also caused the United States dollar to recover from its lowest point in four years, further driving precious metal prices lower.

The sell-off continued on Monday, likely as investors continued to take profits from earlier allocations as gold and silver prices declined. On the retail side, buying action remained strong to open the week. Some analysts believe precious metals are likely to rebound. On Sunday, JPMorgan raised its end-of-year price target for gold to $6,300, another $800 higher than its current all-time high of approximately $5,500/ozt. Analysts from the leading U.S. bank argued that the current sell-off is part of a “position washing” of shorts, but that demand from both “central banks and investor diversification” is likely to push the metal to $6,300 per troy ounce before the end of the year.

Warsh faces a difficult path to confirmation in the U.S. Senate. After his nomination on Friday, Republican Senator Thom Tillis reiterated his promise to withhold his vote for the nominee until the DOJ’s investigation into Jerome Powell is concluded. Tillis had originally criticized the DOJ in January after the Federal Reserve confirmed it had received a subpoena from the agency as part of an investigation into the rising costs of renovations to the central bank’s headquarters in Washington, D.C. Both Powell and Tillis called the legitimacy of the investigation into question, asserting that it is actually part of Trump’s larger effort to undermine Powell in order to force him to cut interest rates. Sen. Tillis reaffirmed his commitment to withholding his vote in an X post.

My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved.

Tillis is a member of the Banking panel, which will decide whether Warsh’s nomination escapes the committee and receives a larger vote in the Senate. Assuming that all Democrats also block the confirmation, which seems likely, Tillis’ vote would effectively block Warsh’s nomination from being approved in the Republican-held Senate. President Trump referenced Tillis’ opposition while signing executive orders, saying, “That’s why he’s not a senator very soon.”

Friday will see the release of the January U.S. employment report, which is likely to be an important data point for the FOMC as it prepares for its next meeting in March. The cooling U.S. labor market justified three consecutive interest rate cuts at the end of 2025, and the FOMC currently appears cautious about any further cuts to the federal interest rate. If a rate does happen in March, it will likely follow a decline in employment numbers and stable inflation approaching the central bank’s longstanding 2% target.

As of Monday, the Federal Reserve is widely expected to keep interest rates unchanged at its March 18th meeting. CME FedWatch projected the probability of a rate cut at just 10.4%, down from 15.4% last week and 61.1% one month ago. Interest rate expectations are likely to fluctuate throughout February and early April as the FOMC considers new reports on inflation and employment.

Gold and silver prices continued to fall on Monday, extending losses that began with a historic sell-off on the heels of Warsh’s nomination as Federal Reserve Chair last Friday. Retail demand remained heightened during the dip, and opinions on Wall Street are divided on where precious metal prices may go from here.