A trader works on the floor of the New York Stock Exchange (NYSE) in New York, United States, Wednesday, January 28, 2026.
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Precious metals and oil prices extended losses on Monday, with analysts and strategists pointing to U.S. President Donald TrumpIt is choice of Kevin Warsh as successor to Federal Reserve Chair Jerome Powell as a trigger for the latest economic downturn.
Spot gold prices fell 3.2% to $4,713.39 an ounce in early European trading hours, deepening losses of a historic rout on Friday, when it fell more than 9%, marking its biggest one-day decline since 1983.
Spotted Silver prices fell 2.7% to $82.29 an ounce around 9:54 a.m. London time (4:54 a.m. ET). The white metal fell more than 31% on Friday, recording its worst daily performance since 1980.
Deepening metals rout coincides with broader market slowdown, with pan-European Stoxx 600 index loss tracking Asia-Pacific markets. US Stock Futures were also observed at the start of the trading week in negative territory.
Distribution of 5 to 10%
“Our thesis has always been pretty simple,” Grace Peters, global investment strategist at JPMorgan Private Bank, told CNBC’s “Squawk Box Europe” on Monday.
“When we look at the portfolio, we want to have geopolitical hedges, safe haven assets, Treasuries, dollars, gold – all of which don’t perform the same and we think gold is the best geopolitical hedge,” Peters said.
Factors such as central bank purchases and support from institutional investors are likely to push gold prices higher through 2026, Peters said, noting that his team maintained its forecast of $6,500 an ounce by the end of the year.
Asked why investors hold gold, Peters said that while developed markets are saturated with the yellow metal, emerging market central banks are not, citing Poland and Brazil as examples.
“When you think about institutional investors, and even retail investors, gold represents a little over 3% of the market. [assets under management] when you think about equities, fixed income and alternatives,” Peters said.
“I think a 5-10% position across portfolios is what we could reasonably achieve, and when we look at our own clients’ books, they’re not in it for gold,” she added.
The Fed is worried
Charles-Henry Monchau, Syz Group’s chief investment officer, said the sell-off began in late January after a month dominated by investor fears that the Fed could soon lose its independence and expectations that the U.S. dollar would continue to fall, among other concerns.
The U.S. dollar index, which measures the greenback against a basket of its major rivals, rose 0.2% Monday morning. It has lost 1.2% so far this year, after falling more than 9% in 2025.
“And that led to a big trade, which was long commodities, long precious metals, long value, long emerging markets, and so on. All of that obviously paying leverage,” Monchau told CNBC.Squawk Europe Box” on Monday.
Yet the surprise appointment of Warsh, who is seen as something of a “hawkish dove,” has prompted investors to rethink their policies. According to Monchau, one of the main problems for market participants is that Warsh has advocated that the Fed reduce the size of its balance sheet.
“As we all know, markets are dependent on liquidity and that is currently the main stress. Besides, there are a lot of uncertainties in terms of timing. He has to be elected as one of the members of the Fed, and then he has to be elected as chairman of the Fed,” Monchau said.
“There is also a question mark as to whether or not Mr. Powell will remain on the board…so there is a lot of uncertainty and the market doesn’t like uncertainty,” he added.
Nitesh Shah, head of commodities research and macroeconomic research for Europe at WisdomTree, said gold and silver prices clearly saw a “fantastic rally” for most of January, beating many analysts’ expectations.
“The prices were a little too strong initially and it only took one trigger to deflate them and that was the nomination of Kevin Warsh,” Shah told CNBC.Europe First edition” on Monday.
“Fears that the independence of the Fed would be lost by almost a Trump puppet have not manifested, or have not yet manifested, and so one of the pillars that supported these metals has collapsed,” he added.
A healthy correction?
It’s not just JPMorgan Private Bank that has erased gold’s latest downturn. A number of analysts remain constructive on the metal’s outlook for the coming months.
WisdomTree’s Shah said the selloff in precious metals should be seen as a “healthy correction” rather than a deeper pullback, noting that investors should prepare for a few more days of volatility.
Looking to the end of the year, Shah said he expects gold prices to reach $5,020 per ounce, while silver prices are expected to trade around $88 per ounce over the same time horizon. “So there is potential relative to where we are today, but it will take a little bit of speculative froth,” Shah said.
Silver price over the last five days.
Analysts at Deutsche Bank, for their part, reiterated their forecast for gold to rise to $6,000 per ounce by the end of the year.
The German bank said in a research note published on Monday that it did not view the latest pullback as evidence of lasting change, saying the yellow metal’s thematic drivers appeared unchanged.
Oil prices also fell Monday morning after Trump said the United States and Iran were “talking seriously,” signaling de-escalation as Washington “talked seriously.”massive armada” is approaching the OPEC member.
International reference Brent crude futures with April delivery fell 5% to $65.88 a barrel, while the U.S. West Texas Intermediate Futures with delivery in March last saw a 5.3% decline to $61.76.
According to Reuters, the declines put oil prices on track for their biggest single-session decline in more than six months.
Panic mode
Max Kettner, chief multi-asset strategist at HSBC, said the latest drop should be seen as an unwinding of positions rather than evidence of market panic.
“If you look at, for example, gold and silver or the precious metals complex, one of the questions that investors faced throughout January was, how come this is a risk-friendly environment if precious metals are rallying at the same time?” Kettner told CNBC’s “Europe Early Edition” on Monday.
“So by extension, now that precious metals have gone down, we can’t have the same thing anymore. We can’t say, OK, precious metals are down. That’s also very bad, and it leads to a kind of panic,” he continued.
“Does this really have very big implications for stocks, for credit? Does it change the earnings outlook? Does it change the valuation outlook? Not really,” Kettner said.
