Gold Slides Below $5,000 as Dollar Strengthens Ahead of Fed Chair Announcement

Gold prices plunged sharply on Friday, breaking below the $5,000 level as a rebound in the U.S. dollar triggered heavy profit-taking following a historic rally driven by safe-haven demand.

Spot gold fell as much as 8% during the session, touching $4,957.54 an ounce, before trimming losses to trade down 5% at $5,124.37 by 1132 GMT. U.S. gold futures for February delivery dropped 3.9% to $5,118.40.

The selloff came just a day after bullion surged to a record high of $5,594.82. Despite Friday’s sharp correction, gold remained on track for a gain of more than 18% in January, marking its strongest monthly performance since 1982 and extending a streak of six consecutive monthly gains.

Markets reacted to expectations that U.S. President Donald Trump will announce his nominee for the next Federal Reserve Chair later on Friday. Former Fed Governor Kevin Warsh is widely viewed as the frontrunner, and his support for a smaller Fed balance sheet has fueled speculation of tighter financial conditions.

The U.S. dollar strengthened in response, rebounding from a four year low earlier this week. The firmer dollar reduced the appeal of dollar priced bullion for overseas buyers, adding pressure to gold prices.

Physical demand remained robust despite the pullback. Gold premiums in India climbed to their highest level in more than a decade on strong investment buying ahead of a potential import duty hike, while premiums in China also jumped amid renewed investment and jewelry demand.

Other precious metals also suffered steep losses as investors locked in profits. Spot silver tumbled 11.7% to $102.57 an ounce after hitting a record $121.64 on Thursday, though it remained up about 42% for the month. Platinum dropped 10.9% to $2,343.40 after touching an all time high earlier this week, while palladium slid 8.4% to $1,838.14.

The broad selloff highlighted how rapidly sentiment has shifted as markets reassess monetary policy expectations following one of the strongest rallies in precious metals history.