Outlook on the Precious Metal Market

Key Takeaways:

• On Friday January 30th, silver prices fell 25 percent while gold dropped 8 percent.

• Caused primarily by the nomination of Kevin Warsh as the Federal Reserve Chairman

  and the liquidation of margin long positions.

• I would look for metals to pull back before continuing higher in 2026.

• Growth will be driven by continued rate cuts and a weaker dollar.

Last Friday was one of the worst days for precious metals in decades. On Friday January 30th, silver fell over 25 percent while gold dropped 8 percent. This marked the worst day for silver in over 40 years and the worst for gold in decades.

Prior to this, commodities had one of the best years in recent memory. In 2025, gold rose over 60 percent and silver gained 136 percent. This was driven by a couple of key factors. First, the dollar fell over 10 percent in 2025 which made precious metals cheaper for foreign investors. This drove precious metal prices even higher. Another key factor was lower interest rates. The Federal Reserve cut interest rates three times in 2025 totaling 75 basis points. This made fixed income assets like bonds less attractive driving more demand toward gold.

One of the biggest reasons for the metal sell-off on Friday was Trump’s nomination of Kevin Warsh for the Federal Reserve Chairman. Kevin Warsh served on the Federal Reserve Board of Governors from 2006 to 2011 and is considered more “hawkish” than his predecessor Jerome Powell. This means that he is less likely to aggressively cut interest rates as we saw in 2025. Similarly to how lower interest rates drove up demand for metals, higher interest rates decreased demand for the asset.

Another huge reason for the sell-off was the liquidation of margin long positions held by investors. Prior to Kevin Warsh’s nomination, investors were generally bullish on metals and held large margin long positions. A margin position is when a trader borrows money to buy more of a certain asset. This style of trading is very risky due to the possibility of margin calls. A margin call is when a broker requires the investor to deposit more capital in their account to cover a part of the margin. This typically happens directly after a large decline in the value of the security the investor is holding. This exact scenario is precisely what happened. When metal prices tanked on Friday, investors holding margin longs were hit with a margin call and forced to sell. This further drove the market down and contributed to the high magnitude of sell-off.

In 2026, I believe metal prices will see a bit of a pullback from all-time highs. However, I am bullish for the rest of 2026. This is contingent on multiple rate cuts this year. Polymarket currently has a Fed rate hike in 2026 at a 12 percent chance. The Trump administration has also made rate cuts a key part of their fiscal agenda making the possibility of continued rate cuts in 2026 very likely.

In short, I think gold could possibly hit 7000 or higher in 2026 through continued rate cuts and a weaker dollar.