Precious Metals Slide Amid Fed Chair Nomination

Precious metal prices continued their decline on Jan.  30 following a sharp surge earlier in the week, as investors appeared reassured by reports suggesting the Federal Reserve’s independence would remain intact. 

After posting losses exceeding 8%, gold was down 6.54% at US$5,023.60/oz as of 09:55 GMT, while silver, which had dropped as much as 17.6%, was trading 14.95% lower at US$98,417/oz at the same time.

“In general, investors are looking to take profits,” explained Aarin Chiekrie, Analyst, Hargreaves Lansdown. Earlier in the week, both gold and silver had experienced pronounced declines, in contrast to their recent record highs of US$5,595.47/oz and US$121,654/oz, respectively, amid rising uncertainty in United States and global markets.

Much of the recent volatility is linked to developments at the Federal Reserve. On Jan. 30, President Donald Trump was expected to announce Kevin Warsh, a former Fed governor, as nominee for the Fed chair. 

“This decision confirms that neither Kevin Hassett nor Rick Rieder” are front-runners, noted Derek Halpennym, Head of Research, Global Markets EMEA & International Securities, MUFG. Both had been perceived by markets as “inexperienced, too close to President Trump, and therefore susceptible to influence” from him. The president had sought these appointments after intensifying pressure on the central bank, particularly on Fed Chair Jerome Powell, to cut interest rates.

According to Halpenny, Kevin Warsh is a rate-cut supporter but also a strong advocate of Fed independence, meaning “fears that the institution’s independence will erode should now disappear.”

Trump Nominates Warsh Amid Calls for Lower Rates

Today, President Trump officially announced his nomination of Kevin Warsh to serve as the next chair of the Federal Reserve, a move expected to influence US monetary policy amid ongoing calls from the president for lower interest rates.

Warsh previously served on the Fed’s board for five years starting in 2006, having been appointed by former President George W. Bush. He later collaborated with billionaire investor Stanley Druckenmiller and held academic positions, including at the Hoover Institution.

If the Senate confirms him, Warsh would lead a Federal Reserve that has been under persistent pressure from Trump to implement significant rate cuts, measures intended to boost economic growth but which could also heighten inflationary risks. Since September, the Fed has reduced rates three times, most recently on Dec. 10, though officials forecast only one additional cut in 2026.

Earlier this year, Warsh expressed support for lower rates and criticized the Fed’s recent handling of inflation, calling the central bank’s approach a “credibility crisis” in need of “regime change.” At the same time, he stressed the need for the Fed to preserve its independence.

Warsh is set to succeed Jerome Powell, whose measured approach to rate cuts has repeatedly drawn Trump’s criticism. The president has referred to Powell as a “dumb guy,” a “stubborn mule,” and “Mr. Too Late,” even hinting at the possibility of firing him.  Powell, who was initially appointed Fed chair by Trump in 2018 and reappointed by President Biden for a second term, could remain on the Fed’s board until 2028, which may limit the president’s influence on future monetary policy.

Interest Rate Context and Fed Independence

In the United States, interest rates are set collectively by the 12-member Federal Open Market Committee (FOMC), not unilaterally by the Fed chair, though the chair traditionally plays a key role in shaping discussions and guiding consensus among committee members. The Fed’s dual mandate requires it to balance two objectives: keeping inflation in check and supporting full employment.

During 2022 and 2023, the central bank sharply raised interest rates from near-zero levels to their highest in decades, aiming to curb historically high inflation. Since then, the Fed has eased rates cautiously, cutting them by 1% in late 2024 and by another 0.75% from September onward. Its most recent policy meeting left the benchmark rate unchanged, reflecting ongoing caution amid economic uncertainty.

President Trump has publicly criticized the Fed’s incremental approach. On Dec. 10, he emphasized the need for more decisive action, stating that US rates “should be much lower” and that he expects his perspective to be considered. “My voice should be heard… I have made a lot of money, I have been very successful, and I think my role should be at least that of recommending. They do not have to follow what I say.”

Trump has also clashed with the Fed over board appointments, notably attempting to remove member Lisa Cook over alleged mortgage fraud. The courts have blocked this action while her legal challenge proceeds, highlighting the Fed’s protected independence under federal law, which allows board members to be dismissed only for cause. Economists caution that any erosion of this independence could undermine the Fed’s credibility, increase inflationary risk, and encourage policy decisions driven more by short-term political considerations than long-term economic stability.

Outlook for Precious Metals in 2026

While precious metals prices are declining, experts agree these are entering 2026 with notable momentum. Silver experienced an extraordinary rally in January, surging nearly 50% over the month alone. Citigroup forecasts that spot silver could reach US$150/oz within the next three months. On Jan. 26, silver set a new record at US$117.7/oz, including a single-session gain of 14%, the largest since the 2008 financial crisis. Citigroup notes that if the gold-to-silver ratio reverts to its 2011 low of 32:1, silver prices could climb as high as US$170/oz.

Gold continues to serve as the market’s primary safe-haven asset, maintaining prices above US$5,100/oz, with year-end expectations near US$5,200/oz. Factors supporting gold include central bank purchases, geopolitical tensions, and inflows into exchange-traded funds (ETFs). HSBC projects continued volatility, estimating a trading range of US$3,950/oz–US$5,050/oz through 2026.