Gold and Silver Prices Drop Following Warsh Nomination
Gold and silver prices saw a significant drop early Friday morning after the announcement that President Trump intends to nominate Kevin Warsh as the next Chairman of the Federal Reserve.
Investors reacted by selling off precious metals. Gold prices decreased by nearly 10%, falling from $5,500 to around $5,136 per ounce.
At the same time, silver experienced an even sharper decline of about 20%, plummeting from $120 per ounce to approximately $103 per ounce.
Since last year, gold and silver have been climbing to new highs, largely due to investor interest in solid assets amidst inflation concerns, increasing national debt, and political pressure on the Federal Reserve.
These precious metals had become a go-to option for investors worried that the new Fed chair might yield to Trump’s push for steep interest rate cuts.
However, the news of Warsh’s nomination seemed to ease those worries.
His background appears to suggest he would likely uphold the Fed’s autonomy, given his experience as a Fed director from 2006 to 2011.
Dean Ryulkin, founder of the Dean’s List newsletter, commented, “Mr. Warsh has a strong background in investment banking and was notably the youngest Federal Reserve board member in history during the Great Financial Crisis.” He noted that such extensive experience tends to produce clearer signals and fewer unexpected shifts.
“Companies and investors should find it easier,” he added, implying that Warsh’s appointment might lead to a more stable economic environment.
Yet, as gold and silver typically yield less and are often seen as a hedge against inflation and currency devaluation, rising interest rates tend to encourage investments in assets like bonds and cash, which makes precious metals less appealing.
This month, federal prosecutors initiated a criminal investigation into Jerome Powell regarding his statements during a June 2025 Congressional hearing about a $2.5 billion renovation at the Fed’s headquarters. This has raised questions over whether his statements may have been misleading.
Powell described the investigation as a retaliatory act against the Fed for not complying with White House pressure to lower interest rates. He cautioned that using law enforcement in such a manner could compromise the Fed’s ability to base decisions on economic facts rather than political influences.
The investigation has triggered concerns on Wall Street, with various central bankers and financial executives expressing fears of diminishing confidence in the U.S. financial system.
Some Republicans, including Senator Thom Tillis from North Carolina, have indicated they would put a stop to any future Fed nominations until the inquiry is resolved. Tillis notably stated he would oppose any new nominee in the meantime.
On Friday, while calling Warsh a “competent candidate with robust knowledge of monetary policy,” he reaffirmed his stance. “My position hasn’t changed. I will not support the confirmation of any nominee for the Federal Reserve Board, including the Chairman, until the Department of Justice’s investigation into Chairman Powell is transparently concluded.”
