As the dollar value increased, the silver and gold market experienced a decline day, which the industry considered its most unfavorable period throughout its existence. Silver experienced its most significant price decline on Friday, when its price decreased by approximately 28% to $83.45 per ounce.
Its futures contracts experienced a decline of over 31% to $78.53. The traders who held the belief that silver prices would keep rising encountered their first true market behavior when their accounts received margin calls.
Gold Joins the Fall, as Dollar Spikes High
Gold also faced a similar fate when its prices dropped about 9% and traded at $4,895 per ounce. Also, its future declined 11.4% to $4,745. The political trigger initiated this event, which resulted in financial consequences.
President Donald Trump’s nomination of Kevin Warsh, as the next Federal Reserve chair, eased fears that the central bank’s independence was under threat, which sent the dollar sharply higher.
As the dollar reached a peak,it created difficulties for foreign investors who wanted to purchase gold and silver. Ultimately, they had to pay higher costs, while metal prices failed to follow the expected pattern of becoming the world’s reserve currency.
Market Narrative Changes
The market responded to Warsh’s nomination by interpreting it as a signal that has hawkish tendencies. Evercore ISI’s Krishna Guha said,
“The market was trading Warsh hawkish”.
The firm’s Vice Chairman said,
“The Warsh pick should help stabilize the dollar some and reduce (though not eliminate) the asymmetric risk of deep extended dollar weakness by challenging debasement trades – which is also why gold and silver are sharply lower”.
Analysts warned against making predictions about market movements, which would occur in a single direction. The analysts claim that Warsh represents a pragmatic figure instead of an ideological extremist, which creates the possibility that market behavior will first show a strong reaction before returning to normal conditions.
He said,
“But, we advise against overdoing the Warsh hawkish trade across asset markets – and even see some risk of a whipsaw. We see Warsh as a pragmatist not an ideological hawk in the tradition of the independent conservative central banker.”
Forced Selling Turns into a Dip
The decline in prices led to rapid escalation of events. Matt Maley, who is an equity strategist for Miller Tabak, described the situation as crazy, while he pointed to silver market conditions that involved forced selling and traders using excessive leverage.
Day traders had developed a strong interest in the metal, which resulted in margin calls that intensified the market decline. The market experienced a disruptive decline, because its traders had built up excessive positions and were forced to liquidate their assets.
Matt Maley said,
“This is getting crazy. Most of this is probably ‘forced selling.’ This has been the hottest asset for day traders and other short-term traders recently. So, there has been some leverage built up in silver. With the huge decline today, the margin calls went out”.
From Highest Point to a Sudden Drop
The precious metals market experienced a sudden drop after reaching its highest point during the previous year. Gold prices increased by 66% and silver prices increased by 135% during 2025 due to geopolitical tensions, declining value of the dollar, and worries about the Federal Reserve’s independence. The investment managers discovered that concentration risk had developed very quietly.
Katy Stoves of Mattioli Woods said,
“The moves were likely a market-wide reassessment of concentration risk. Just as tech stocks — particularly AI-related names — have dominated market attention and capital flows, gold has similarly seen intense positioning and crowding. When everyone is leaning the same way, even good assets can sell off as positions get unwound. The parallel isn’t accidental: both represent areas where capital has flooded in based on powerful narratives, and concentrated positions eventually face their day of reckoning.”
ETFs Feel the Pain
The asset selloff created a widespread impact, which affected numerous related assets. Coeur Mining shares experienced a 17% decline, while silver ETFs suffered severe losses.
The ProShares Ultra Silver fund experienced a 62% drop, while the iShares Silver Trust ETF declined 31%, which resulted in both funds heading towards their worst performance of all time. When ETFs face situations where leverage and volatility combine, they experience more severe losses.
Is This the End of Metals Bull Run?
Analysts Toni Meadows from BRI Wealth Management, believes that gold prices should not reach $5,000 because the price increase happened too rapidly. The dollar reached stability while central banks reduced their purchasing activities, which caused existing momentum to lose power.
However, trade tensions, geopolitical uncertainty, and global reserve diversification continue to operate as fundamental market drivers. Also, assets with strong value can experience sell-offs when traders become overly focused about one particular position.
Toni Meadows said,
“Central bank buying has driven the longer-term rally but this has tailed off in recent months. The case for further reserve diversification is still there though as Trump’s trade policies and intervention in foreign affairs will make a lot of countries nervous about holding U.S. assets, especially those countries in the emerging markets or aligned to China or Russia. Silver will mirror the direction of gold, so it is not surprising to see falls there.”
Bottom Line
The collapse on Friday did not determine the worth of gold and silver, because it showed that all market uptrends will eventually face their downward pull. Market movements cause the most valuable assets to lose their shine when market narratives change, leverage unwinds, and the U.S dollar strengthens.
The value of precious metals will return to its former state, yet current market conditions demonstrate that investors who follow popular trades will face their typical results.
