Gold Plunges After Warsh Fed Pick: $3.7T–$15T Liquidation Shock Hits Metals
Gold experienced a sudden, steep sell-off after news around Fed nominee John Warsh triggered forced liquidations in precious metals markets. According to market commentary cited in the article, spot gold fell roughly 15% in a rapid intraday move (quoted near $5,064), while silver plunged about 38%, as leveraged positions were flushed and liquidity thinned. Analysts estimate combined paper losses across gold and silver ranged from $3.7 trillion to as much as $15 trillion. Technical analysis referenced shows XAUUSD trading below a falling trendline with RSI near 34, highlighting weak momentum and several demand zones between the mid-$4,500s and high-$4,800s as potential support. The chartist cautioned the move may be an unfinished correction, warning of whipsaw risk and a possible further downside pivot around $4,606 if selling resumes. Traders are watching for stabilization signals—RSI convergence and reduced volatility—before positioning for a recovery. Key keywords: gold price, XAUUSD, silver crash, forced liquidations, leveraged positions, RSI, demand zones.
Bearish
The immediate market impact is bearish. A fast, large-scale liquidation in gold and silver—driven by a macro political/event catalyst around the Warsh Fed pick—forces deleveraging and thins liquidity, which typically accelerates downside price moves and creates volatility. The reported 15% drop in gold and 38% in silver are significant shocks that undermine safe-haven demand in the short term and can trigger further stops and margin calls, prolonging selling pressure. Technical indicators reinforce this: XAUUSD below a falling trendline with RSI near oversold levels but not yet showing stable divergence suggests the move may continue or remain choppy until clear consolidation. Historically, similar rapid deleveraging events (e.g., flash crashes or policy shocks) cause short- to medium-term weakness, increased correlation between metals and risk assets, and elevated volatility. For traders: short-term strategies favor risk management, reducing leveraged long exposure, and watching demand zones (mid-$4,500s to high-$4,800s) and RSI stabilization for potential re-entry. Longer-term fundamentals for gold (inflation hedge, monetary policy uncertainty) remain intact, so any deep overshoot could create buying opportunities once volatility subsides and positioning normalizes.