TLDR

Gold futures dropped 11% to below $4,900 per troy ounce on Friday, marking spot gold’s biggest daily decline since the early 1980s
Silver futures crashed over 25%, falling from a Thursday peak of $120 per ounce to around $83, with spot silver down as much as 34% intraday
The sell-off occurred after President Trump nominated Kevin Warsh as next Federal Reserve Chair, easing concerns about central bank independence
Analysts warned the precious metals rally had become overextended and vulnerable, with thin liquidity and speculative flows distorting price movements
Bitcoin fell only 1% during the metals crash, prompting discussions about potential capital rotation from precious metals into cryptocurrency

Precious metals experienced a dramatic reversal on Friday as gold futures fell 11% to trade below $4,900 per troy ounce. Silver futures tumbled more than 25% in what marked one of the sharpest single-day declines for both metals in decades.

Micro Gold Futures,Apr-2026 (MGC=F)

Spot gold recorded its largest daily drop since the early 1980s. Spot silver plunged as much as 34% at the lows before recovering slightly to trade around $85 per ounce.

The crash came after President Trump selected Kevin Warsh as the next Federal Reserve Chair. The nomination appeared to ease concerns about the central bank’s independence given Warsh’s historically hawkish stance.

The sell-off followed a period of steep gains for both metals. Gold had rallied past $5,500 on Wednesday after the Federal Reserve held rates steady.

Silver had peaked at $120 per ounce on Thursday. The metal’s smaller market size and heavier speculative participation helped drive the parabolic price action.

Analysts Warned of Overextended Rally

Market strategists had been sounding alarms about the precious metals rally before the crash. Mike McGlone, senior commodity strategist at Bloomberg, said higher metal prices increased the likelihood that 2026 would mark lasting price peaks.

“When prices rise as rapidly as they have in the metals, deficits can shift fast,” McGlone wrote on Friday. He pointed to fundamental reasons for rallies but cautioned against the speed of recent gains.

Ole Hansen, head of commodity strategy at Saxo Bank, warned on Thursday that the surge in metals was entering a dangerous phase. “The problem is volatility feeding on itself. As price swings intensify, liquidity thins,” Hansen explained.

Just last week Goldman Sachs analysts had set a year-end price target of $5,400 for gold. The firm cited potential upside from increased private-sector investor participation.

The precious metals rally had been fueled by a weaker U.S. dollar. The U.S. Dollar Index has declined about 10.5% year-over-year, making dollar-priced assets more attractive.

Robin Brooks, senior fellow at the Brookings Institution, noted before the crash that conviction levels in the dollar-down trade were high. “The weak Dollar is super-charging the debasement trade,” Brooks wrote on Thursday.

Bitcoin Emerges as Potential Rotation Target

The metals crash prompted speculation about capital rotation into other assets. Bitcoin fell only 1% during the Friday sell-off, a relatively modest decline compared to precious metals.

Analyst Michaël van de Poppe highlighted the contrast on social media. “Gold is down 15–20% on a day. Silver is down 30%. Bitcoin? Only 1%. The rotation game begins,” van de Poppe wrote.

However, Bitcoin has faced its own challenges recently. At the time of reporting, BTC was down about 6% on the week and 18.9% over one year.

Veteran trader Peter Brandt suggested silver could bounce from Friday’s lows but warned the damage might take months to repair. “We may not see a new high in silver for months. The battle has been lost, but the war will still be won,” Brandt posted.

Analyst Mihir took a more cautious view on crypto rotation. “Money rotates among various asset classes. If liquidity flows out of precious metals, it has to go somewhere,” Mihir said.

JPMorgan analysts had noted earlier in January that silver prices had already overshot their forecasted averages. The bank acknowledged that calling a top was nearly impossible in markets showing parabolic momentum.

CNBC reporting earlier in the week questioned whether the precious-metals market was “broken.” The coverage focused on thin market depth and speculative flows distorting price movements in both directions.

At the time of reporting, gold was trading at $4,914.96 per ounce, down 8.48%. Silver was at $85.18 per ounce, down 26.30%. Bitcoin was trading at $84,219.

The post Gold Drops 11% and Silver Falls 25% in Friday Precious Metals Crash appeared first on CoinCentral.

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Filed under: News - @ January 31, 2026 7:29 am