Gold (GC=F) futures fell 11% on Friday, falling below $4,800 an ounce, a severe reversal of the precious metal’s sharp gains this year.
Spot gold suffered its biggest one-day drop since the early 1980s, while silver (SI=F) also plunged more than 25%, its biggest one-day drop on record, severely reversing the precious metal’s sharp gains this year.
The volatility followed a broader stock market sell-off, with major averages lower after President Trump selected Kevin Warsh to be the next Federal Reserve chair. The appointment is seen as easing concerns about the central bank’s independence, as Warsh has historically tended to be hawkish.
However, strategists say gold and silver’s epic rally is due for a pullback.
“If history is any guide, the higher metal prices rise, the more likely a durable price peak is in 2026, especially silver,” Mike McGlone, senior commodities strategist at Bloomberg, wrote on Friday.
“There are always sound fundamental reasons for increases, but when prices rise as quickly as metals do, the deficit can shift quickly,” he added.
“I think the continued surge in metals, especially gold and silver, is entering a dangerous phase,” Ole Hansen, head of commodity strategy at Saxo Bank, said on Thursday.
“The problem is volatility itself. As price volatility increases, liquidity decreases,” he added.
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Just last week, Goldman Sachs analysts set a year-end price target for gold of $5,400, with potential upside risks due to increased participation from private sector investors.
Precious metal prices rose above $5,500 on Wednesday after the Federal Reserve kept interest rates steady, with comments from Fed Chairman Jerome Powell failing to stem the dollar’s slide.
“I think this indicates a high level of conviction in the dollar decline trade,” Brookings Institution senior fellow Robin Brooks wrote in a note before gold prices fell on Thursday. “A weaker dollar is exacerbating depreciating trade,” he noted.
Silver topped $120 an ounce before giving back gains and was trading around $87 an ounce on Friday.
The precious metal is up about 28% year to date following a stunning rally in 2025.
JPMorgan analysts noted earlier this month that “silver prices have moved well beyond our average forecast, although calling it a peak is nearly impossible when the market is showing near-parabolic price momentum.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X: @ines_ferre.
