Gold Slides After Trump Picks Kevin Warsh for Fed Chair

Trump’s Fed Pick Sparks a Rates Reset, Gold Reacts

President Donald Trump has nominated Kevin Warsh to succeed Jerome Powell as chair of the Federal Reserve when Powell’s chair term ends in May 2026.

Warsh is not a new face to markets. He served as a Fed governor from 2006 to 2011, which means he was in the room during the 2008 crisis era.

Why does that matter for gold and silver?

Because precious metals do not just trade on inflation headlines. They trade on expectations for the path of interest rates, real yields, and the US dollar. When the market starts to believe policy may stay tighter for longer, the setup can turn from tailwind to headwind fast.

Lately, the backdrop has already been shifting. With inflation proving sticky, traders had started to reassess how quickly the Fed can cut. Gold had been benefiting from the earlier narrative of aggressive easing and eventual liquidity support. When that narrative cools, it can pull demand forward and then leave the market exposed to a sharp air pocket.

This is where the Warsh nomination may have mattered at the margin.

Warsh is widely viewed as a more orthodox monetary policy figure, and some commentary has framed him as less likely to deliver rapid, deep cuts than what parts of the market had been leaning into.

If traders perceive a lower probability of quick easing, expected rates can move up. When expected rates move up, the dollar often firms and real yields often rise, both of which can pressure gold in the short term because gold offers no yield.

So the key point for investors is this.

Even if nothing about gold’s long-term role has changed, a change in the perceived policy reaction function can be enough to trigger a sentiment shift. That shift hits positioning first, then price, and it can look like a “sudden” sell off even though it is really the market repricing the expected path of rates.

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Kevin Warsh on interest rates right now

• He thinks the Fed has been too slow and too backward looking about cutting. He has argued the Federal Reserve has been “backward-looking” and “too slow to cut,” which implies he leans toward easier policy from current levels, at least initially.
• But he is not a guaranteed “slash rates” chair. Even Reuters notes that markets were still priced for only modest easing and that how far he cuts remains an open question given inflation and committee constraints.
• He’s trying to frame a rate-cut case around productivity. Multiple writeups describe him aligning more with lower-rate arguments recently, including the idea that productivity gains (often linked to AI) could help keep inflation contained even with easier policy.