Precious metals markets witnessed a dramatic reversal on Friday as gold and silver came under intense selling pressure, marking one of the sharpest single-day declines in recent memory. The sell-off was triggered by a combination of profit-taking after a sustained rally and a strengthening US dollar following significant political developments.
Historic Intraday Crash for Silver
Silver, which had been outperforming gold during the recent bull run, experienced a catastrophic drop of ₹72,000 per kilogram, representing a staggering 20% decline. This pushed the March delivery contract on the Multi Commodity Exchange (MCX) down to ₹3,27,913. In international markets, spot silver prices fell 18% to reach a daily low of $94.85 per ounce.
If this selling pressure continues, it will definitively end the five-day rally that had characterized MCX trading. The correction actually began during Thursday's late trading hours, when silver prices dropped ₹20,155 from their intraday high to settle at ₹3,99,893. Taking Friday's low into account, silver has declined a massive ₹92,135, or 22%, from its record high of ₹4,20,048.
Gold Follows Silver's Downward Spiral
Gold prices mirrored silver's dramatic fall, with MCX delivery contracts for February tumbling ₹15,246 per 10 grams, representing a 9% decline to reach the day's low of ₹1,54,157. From its record high of ₹1,80,779, gold has now crashed ₹26,622 per 10 grams, signaling a significant correction in what had been an unstoppable upward trend.
The Trigger: Trump's Federal Reserve Nomination
The primary catalyst for this sharp reversal emerged from political developments in the United States. The precious metals rally, which had dominated markets for months, abruptly reversed as speculation intensified that President Trump would select Kevin Warsh to replace current Federal Reserve Chair Jerome Powell. The sell-off accelerated dramatically after Trump officially announced his nomination of former Fed governor Warsh as the next central bank chief.
The US dollar strengthened significantly following Trump's announcement on Truth Social, making dollar-denominated commodities like gold and silver more expensive for holders of other currencies. Market movements suggested traders were adjusting their expectations for monetary policy easing under Warsh, who during his previous tenure as a policymaker from 2006 to 2011 frequently emphasized inflation risks while others focused on supporting economic growth and employment during the financial crisis.
Ending Months of Speculation
This announcement concluded months of uncertainty about Federal Reserve leadership after Trump repeatedly criticized Chair Jerome Powell for not implementing interest rate cuts. Powell's term is scheduled to end in May, according to Bloomberg reports. Meanwhile, the US dollar index, which measures the currency against six major counterparts, rose 0.6% to 96.76 during Friday's trading session. The greenback had already surged 0.54% on Wednesday, marking its largest intraday gain in four months, after the US Federal Reserve maintained interest rates at current levels.
Monthly Gains Despite Sharp Correction
Despite these significant pullbacks, both gold and silver remain positioned to close January with substantial monthly gains of 20% and 46% respectively. To provide context for silver's remarkable journey: the metal crossed the ₹1 lakh mark on MCX in October 2024, taking 14 months to reach the next milestone of ₹2 lakh on December 12, 2025.
The acceleration then became extraordinary: silver needed just 25 days to reach the ₹3 lakh mark on January 19, 2026, and then achieved the next ₹1 lakh increase even faster, hitting ₹4 lakh in only nine trading sessions during the previous market session before this dramatic correction.
Investors are advised to consult with certified financial experts before making any investment decisions regarding precious metals or other financial instruments.
