Off Record Highs, Gold and Silver Sink as Trump Set to Taps Kevin Warsh for Fed Chair

Gold and silver prices tumbled sharply early Friday after word spread that President Trump intends to nominate Kevin Warsh as the next head of the Federal Reserve.

Investors swiftly began offloading precious metals, sending gold down as much as 10%, sliding from $5,500 per ounce to roughly $5,136.

Silver saw an even steeper drop, plunging up to 20% from $120 per ounce to near $103.

For more than a year, both metals have rocketed to repeated record highs as investors sought refuge in hard assets amid surging inflation, ballooning national debt, and concerns the Fed might face political interference.

Much of that demand had been driven by fears that the next Fed chief would bow to pressure from Trump to slash interest rates aggressively. News of Warsh’s selection appeared to calm those worries.

Warsh, who previously served as a Fed governor between 2006 and 2011, is seen as a hawkish choice; one likely to preserve the central bank’s independence.

“Warsh came up in investment banking at Morgan Stanley, served as one of the youngest Fed governors in history, and was seriously in the room during the great financial crisis,” Dean Lyulkin, founder of The Dean’s List newsletter, told The NY Post.

“That pedigree is rare. It tends to produce clear signals, few surprises, and a pragmatic approach to the delicate balance between inflation and growth.”

“Businesses and investors should breathe easier,” he added.

Because gold and silver produce no yield, they tend to lose appeal when interest rates remain high, making bonds and cash more attractive by comparison. The expectation that Warsh won’t immediately cut rates helped accelerate the metals’ selloff.

The backdrop to the announcement is extraordinary: federal prosecutors recently launched a criminal probe into current Fed Chair Jerome Powell over his June 2025 congressional testimony regarding a $2.5 billion renovation of the central bank’s headquarters. Investigators have issued grand jury subpoenas to determine whether Powell’s statements were misleading.

Powell publicly revealed the investigation earlier this month, framing it as retaliation for the Fed’s refusal to succumb to pressure from the White House to slash rates. He cautioned that using law enforcement as leverage against the central bank jeopardizes its ability to set policy based on economic fundamentals rather than politics.

The inquiry prompted immediate alarm throughout the global financial community, with banking executives and central bankers warning it could shake confidence in the US financial system.

Several Republican lawmakers — including Sen. Thom Tillis of North Carolina — have vowed to block Fed nominees until the investigation is resolved. Tillis has repeatedly said he will oppose any new confirmations during the ongoing probe.

On Friday, he called Warsh “a qualified nominee with a deep understanding of monetary policy” but stood firm on his position.

“My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,” Tillis wrote on X.