Trump names inflation hawk as Federal Reserve Chief sparks selloff in gold and silver

Efforts to confront inflation under that framework would likely involve higher interest rates, a move that typically strengthens the dollar and reduces the appeal of precious metals as safe-haven assets.

By Vered Weiss, World Israel News

Gold and silver prices tumbled Friday after President Donald Trump named Kevin Warsh as his choice to lead the Federal Reserve, triggering a surge in the US dollar and a rapid reassessment of where American monetary policy may be headed, Fox News reported.

The reversal ended a months-long rally that had pushed both metals to new highs as investors sought protection from inflation, trade friction, and concerns about the dollar’s durability. Within hours of the announcement, gold recorded its sharpest selloff since 2013, while silver posted its steepest single-day drop since 1980, wiping out billions in market value and catching traders off guard.

Warsh is widely regarded as a free-market advocate and an inflation hawk whose views differ from much of the current Federal Reserve leadership.

Influenced by economist Milton Friedman, he has argued that inflation results from excessive money creation. That perspective contrasts with recent policy approaches that emphasize low borrowing costs.

Investors interpreted the nomination as a signal that tighter monetary policy could follow.

Efforts to confront inflation under that framework would likely involve higher interest rates – a move that typically strengthens the dollar and reduces the appeal of precious metals as safe-haven assets.

Before the nomination was confirmed, gold and silver had maintained their upward momentum. The abrupt change in sentiment rattled many investors, including retirement-age Americans who had turned to precious metals as a perceived store of stability amid policy uncertainty.

Market participants are now weighing how further signals from Washington and potential shifts at the Federal Reserve could affect volatility in the months ahead. At the same time, longer-term demand for gold has been supported by continued purchases from foreign central banks. China, in particular, has been diversifying its reserves away from the US dollar as geopolitical tensions persist.

The sudden swing highlighted how closely commodities markets are tracking expectations for US monetary leadership and policy direction, with traders quickly recalibrating positions in response to signals from the White House.