US President Donald Trump has nominated Kevin Warsh as successor to Jerome Powell for the position of Fed Chair. The announcement came surprisingly early and immediately moved the markets. Gold and silver are correcting sharply, the dollar is stabilizing, while the indices initially came under pressure.
Gold and Silver Under Pressure
Gold has corrected sharply from yesterday's all-time high of around $5,626 and is currently trading at about $5,100 (–3.7 %). Silver has given way similarly strongly – from the high area around $120 it fell below $100 (–9–10 %), now fighting around this mark. Both metals initially found support in the zone around $5,150 (gold) and just above $100 (silver), but show clear uncertainty after the previous overbought condition.
Why Warsh is considered hawkish
Kevin Warsh, former Fed Governor (2006–2011), is considered rather hawkish in monetary policy. In the past he has advocated a tighter stance, criticized the strong expansion of the Fed balance sheet and warned of inflation risks. While he has been more open to lower interest rates in recent times, many observers see in him a candidate who tends toward more restrictive policy rather than aggressive cuts. That would mean: longer higher interest rates, stronger dollar potential, less liquidity – classic headwind for gold and other commodities.
Market Reaction
The US Dollar Index (DXY) has gained on the news and is stabilizing at around 96.50–96.60. The US indices (S&P 500, Nasdaq, Dow) initially slipped into the red, but are partially recovering in pre-market. The announcement is interpreted as a signal for a more independent, but potentially tighter Fed policy – which dampens risk appetite.
Conclusion
The nomination of Kevin Warsh creates new uncertainty and nervousness. After Trump's statements about a potentially weak US dollar, the exact opposite was certainly expected from Kevin Warsh. Gold and silver, which benefited significantly from Trump's dollar statement a few days ago, are now correcting sharply, the dollar remains stable and the indices are oscillating. The market is now waiting for further details on confirmation. Any new impulse could lead to strong swings. Anyone who wants to follow the market and prices live on PC or smartphone will find a neutral overview here of established platforms that cover almost the entire range of assets: To the Trading Platform Overview.
