To The Moon

Precious metals suffered a severe setback on Friday, with gold and silver prices plunging sharply as a report that the Trump administration plans to nominate Kevin Warsh for Federal Reserve Chair pushed the U.S. dollar higher, cooling the record-breaking rally. Silver prices collapsed by over 16%, falling to around $96 per ounce, while gold tumbled more than 7%, breaching the $5,000 mark. The violent swings in the precious metals market intensified, putting an end to the sustained advance that had pushed technical indicators into overbought territory. The U.S. dollar index rose as much as 0.5%, increasing the cost for most buyers to purchase precious metals; both silver and platinum prices plummeted over 10%. Reports indicated that U.S. President Donald Trump is expected to nominate Warsh as Fed Chair. The former Federal Reserve governor has long been known as an inflation hawk, but in recent months he has publicly advocated for lowering interest rates, aligning himself with the President's stance. Trump previously stated he would announce his nominee for Fed Chair on Friday morning U.S. time. Christopher Wong, a strategist at OCBC Bank, said gold's move "confirms the warning that what goes up must come down." He noted that while news of Warsh's nomination served as the trigger for the plunge, a correction in precious metals prices was already imminent. "It's as if the market was waiting for an excuse to end the nearly parabolic frenzy seen recently," he added. So far this year, gold and silver prices had already surged dramatically, with several technical indicators flashing warning signals, including the Relative Strength Index (RSI). In recent weeks, the index showed both precious metals were in overbought conditions and ripe for a pullback; gold's RSI recently hit 90, a multi-decade high. Even after this correction, gold's gains for January remain around 17%, still on track for its largest monthly advance since 1980. Silver's performance has been even more staggering, with a year-to-date increase of 43%. The Trump administration's disruptive actions towards the global order have been a major driver of the precious metals rally, including the seizure of a Venezuelan head of state, threats to annex Greenland, and imposing tariffs on allies, among other moves. Recently, Trump has repeatedly warned of potential military strikes against Iran and stated he will levy tariffs on all countries supplying oil to Cuba. Meanwhile, Trump reached a temporary agreement with Senate Democrats, once again averting a U.S. government shutdown. The White House is currently continuing negotiations with Democrats in an effort to establish new restrictions for immigration raids that have sparked nationwide controversy.