Gold and Silver Relive 1980 as a Once-Red-Hot Metals Rally Collapses in Spectacular Fashion

Gold and silver suffered their worst crash since 1980 on Friday, abruptly ending a powerful rally that had driven precious-metals prices to record levels over the past several months.

Gold futures fell as much as 11%, dropping below $4,900 per ounce, while silver plunged more than 25% in a single session. Spot gold recorded its largest one-day decline in the last 40 years, a sharp reversal after an extended period of steady gains.

The pullback followed weeks of relentless upside momentum. Gold and silver had climbed rapidly as investors sought protection against inflation, rising government debt, and concerns about the long-term purchasing power of fiat currencies. Price dips were shallow and short-lived, reinforcing confidence in the trade. By midweek, silver had reached nearly $120 an ounce, while gold briefly moved above $5,500.

Then the floor gave way.

As prices began to decline, selling intensified, forcing leveraged traders to unwind positions. Liquidity thinned across futures markets, and what initially appeared to be routine profit-taking escalated into a huge selloff.

Pressure on metals increased after President Trump confirmed plans to nominate Kevin Warsh as the next chair of the Federal Reserve. Warsh is widely regarded as more focused on inflation control than economic stimulus, and his expected appointment helped ease concerns that the central bank would face political pressure to maintain looser monetary policy.

That reassessment had direct implications for precious metals.

A weakening U.S. dollar had been a central driver of gold and silver’s rally. As expectations shifted toward firmer monetary discipline, the dollar strengthened sharply, removing a key source of support for metals prices.

For much of the past year, the trade was fully reliant on a softer dollar pushing metal prices higher. Once that relationship faltered, positions were unwound rapidly.

Strategists had cautioned that valuations were becoming extended.

“The higher metals rise, the more likely 2026 will mark enduring price peaks (notably for silver) if history is a guide,” wrote Mike McGlone, senior commodity strategist at Bloomberg, earlier this week, noting that rallies driven primarily by momentum often reverse abruptly.

Ole Hansen, head of commodity strategy at Saxo Bank, had also warned that volatility was increasing. “As volatility rises, liquidity tends to disappear,” Hansen said, a pattern that can accelerate losses once markets turn lower.

The selloff came just days after analysts at Goldman Sachs raised their year-end price target for gold to $5,400. Metals had also benefited earlier in the week from the Federal Reserve’s decision to hold interest rates steady, with comments from Fed Chair Jerome Powell offering little support for the dollar at the time.

“I see this as a sign that conviction levels in the dollar-down trade are high,” wrote Robin Brooks, senior fellow at the Brookings Institution, shortly before prices declined.

That conviction faded quickly.

By Friday afternoon, silver was trading near $83 an ounce, while gold was well below recent highs. Despite the sharp pullback, silver remains modestly higher for the year following its strong rally in 2025.

Analysts at JPMorgan had previously noted that silver prices were running well above historical averages, adding that markets moving at such a rapid pace rarely stabilize smoothly.

And now, just like Bitcoin and Ethereum, it appears that the precious metals hype is ice cold.

At the time of publishing this article, Stocks.News holds positions in Bitcoin and Ethereum as mentioned in the article.