Gold prices plunged more than 4% on Friday after market chatter suggested the incoming Federal Reserve chair could pursue a more hawkish policy stance. Still, bullion remains on course for a dramatic monthly gain - its largest since January 1980 - as investors continue to seek safety amid ongoing geopolitical and economic tensions.
Price moves and records
Spot gold was down 3.9% at $5,183.21 per ounce as of 0323 GMT, after earlier falling as much as 5%. The metal had climbed to a record $5,594.82 on Thursday. Through January, prices have risen more than 20%, putting gold on track for a sixth consecutive monthly increase and the biggest monthly advance since January 1980. U.S. gold futures for February delivery fell 2.7% to $5,176.40 per ounce on Friday.
Drivers cited by market participants
Market analysts pointed to a combination of factors behind Friday’s pullback. KCM Chief Trade Analyst Tim Waterer said a potential less dovish Fed chair pick, a rebound in the dollar and the market having become overbought all contributed to the decline in gold’s price.
Adding to the speculation, U.S. President Donald Trump said on Thursday he intends to announce his pick to replace Fed Chair Jerome Powell on Friday, as debate heightened over leadership of the U.S. central bank ahead of Powell stepping aside in May. Rumors naming Kevin Warsh as a possible replacement were reported to have weighed on gold during Asian trading, according to Matt Simpson, a senior analyst at StoneX.
The dollar recovered from multi-year lows, helped in part by the Fed’s decision on Wednesday to leave interest rates unchanged. Even with the bounce, the dollar was poised for a second straight weekly decline. A stronger dollar tends to make gold, priced in U.S. dollars, more expensive for overseas buyers. Markets still expect two interest rate cuts in 2026.
Flows and related market activity
Customs data released on Thursday showed gold exports from Switzerland to the United Kingdom - home to the world’s largest over-the-counter gold trading hub - jumped to their highest levels since August 2019. In Asia, the Hang Seng Gold ETF surged more than 9% on its trading debut in Hong Kong in the previous session, illustrating robust demand despite Friday’s retreat.
Other precious metals
Silver fell sharply as well, with spot silver down 5.7% to $109.55 an ounce after reaching a record $121.64 on Thursday. The metal has surged 56% so far this month, on course for its best-ever monthly performance. Spot platinum lost 5.3% to $2,489.31 per ounce after hitting an all-time high of $2,918.80 on Monday, while palladium rose 5.8% to $1,890.25.
Conclusion
Friday’s selling underscores how quickly recent sharp gains in precious metals can reverse when expectations about U.S. monetary policy appear to shift. While bullion remains substantially higher month-to-date, traders are reacting to evolving signals about Fed leadership, currency moves and positioning that had built up through a series of record highs earlier in the week.