Gold Slumps Over 4 Percent on Fed Fears

(MENAFN) Gold plunged over 4% Friday as speculation mounted that the US Federal Reserve might install a more inflation-focused chair, yet the precious metal remained poised to deliver its strongest monthly performance in more than four decades as investors flocked to safety amid escalating global uncertainties.

Spot gold tumbled to approximately $5,161.50 per ounce by 0750GMT, retreating from Thursday's record peak of $5,595.46. Despite the sharp selloff, weekly gains still registered around 3.5%.

The yellow metal has skyrocketed roughly 85% across the past twelve months and climbed about 19% year-to-date, propelled by intensifying trade conflicts, geopolitical flashpoints, and monetary easing from leading central banks worldwide.

Silver witnessed an even more dramatic collapse, plummeting 8% to near $106.36 Friday after hitting Thursday's historic high of $121.67 per ounce. Year-over-year, silver prices have exploded more than 235%.

US President Donald Trump announced Thursday his intention to unveil his nominee to replace Fed Chair Jerome Powell on Friday. Mounting speculation suggests former Fed Governor Kevin Warsh stands as the frontrunner.

While Warsh previously earned recognition as an inflation hawk, he has recently aligned with Trump through public endorsements of reduced interest rates.

The Fed's Wednesday decision to maintain current rates enabled the dollar to rebound from multi-year depths, though it teetered on the brink of a second straight weekly decline.

Dollar strength renders gold pricier for international purchasers. Markets continue pricing in two Fed rate reductions throughout 2026.

Separately, President Trump revealed Thursday he intends to pursue diplomatic engagement with Iran, alleviating some concerns regarding potential military action.

"I have had (conversations with Iran in the last few days), and I am planning on it," he disclosed to reporters at the Kennedy Center. However, Trump stressed that "a lot of very big, very powerful" naval vessels are currently en route to Iran.

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