Gold and Silver Prices Plunge Amid Dollar Strength and Easing Trade Tensions
Gold and silver experienced a significant selloff on Thursday, February 5, 2026, as the dollar strengthened and signs of easing tensions between the United States and China added pressure to the precious metals market. The decline follows a period of record highs for both gold and silver last week.
Spot gold declined 2.5% to $4,838.81 per ounce as of 05:35 GMT (10:35am PST), retreating from a near one-week high reached earlier in the session. US gold futures for April delivery also dropped, falling 1.9% to $4,855.60 per ounce.
The rebound in the U.S. Dollar, which reached a near two-week high on Thursday, is a key factor in the price decline. A stronger dollar makes gold more expensive for buyers using other currencies. This shift in currency values coincided with President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, a move that analysts believe contributed to the dollar’s strength.
“The dollar received a new lease of life with the (Kevin) Warsh nomination (as Federal Reserve chief), and the currency has been able to keep making forward progress … traders are more circumspect now on gold in light of recent extreme volatility,” said Tim Waterer, KCM chief trade analyst.
While Warsh has previously advocated for lowering interest rates, he is generally considered “hawkish” on inflation. This perception suggests he may be less inclined to support the aggressive rate cuts President Trump has been seeking. Rising interest rates typically put downward pressure on gold prices, as the metal doesn’t offer a yield like stocks or other interest-bearing assets.
The selloff extended to other precious metals as well. Spot silver plummeted 14.9% to $74.94 an ounce, a dramatic fall from its record high of $121.64 reached last week. Spot platinum slumped 8.7% to $2,033.35 per ounce after hitting an all-time high of $2,918.80 on January 26, while palladium shed 5.8% to $1,672.00.
Broader market sentiment also played a role in the decline. Christopher Wong, a strategist at OCBC, noted that sentiment had “turned soggy across most asset classes, including precious metals, cryptocurrencies and regional equities, with losses feeding into one another and creating a self-reinforcing feedback loop amid thin market liquidity.” Asian stocks also faltered, tracking declines in U.S. Markets due to concerns about the rising costs of investment in artificial intelligence.
Geopolitical developments also appear to be influencing the market. Talks between Iran and the US are scheduled to take place in Oman on Friday, February 6, 2026. China is considering increasing its purchases of U.S. Farm-grown soybeans following what President Trump described as “very positive” talks with his Chinese counterpart Xi Jinping on Wednesday.
“If you remove geopolitical tensions and the de-dollarisation trend for the time being … the metals have little room to run,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
The decline in silver prices is also attributed to weakening industrial demand. “The industrial demand has vanished at the higher levels. Most of the industrial buyers have stopped buying silver, and even solar panel producers in China are looking for alternatives,” Shah added.
Friday’s decline in precious metal prices amounted to the biggest one-day drop in gold’s price since 2013, and silver suffered its worst daily loss.
