The record-breaking rally in metals prices that has captivated investors from Wall Street to Main Street hit the wall on Friday, when silver and gold prices suffered their largest daily losses in more than four decades.
Silver futures, which surged past a 45-year-old record high in October and more than doubled from there, crashed 31% on Friday. Gold futures, which traded above $5,000 a troy ounce for the first time ever a week ago, dropped 11%. Platinum and palladium prices each lost more than 15%. Even copper—used in electronics and plumbing rather than by investors as a store of value—was caught in the metals selloff, with futures shedding 4.5%.
Here’s what to know about the rout in metals prices:
How the plunge unfolded
The rally began to sputter late Thursday around the time that news outlets started reporting that President Trump was planning to nominate Kevin Warsh, a former Federal Reserve governor, as the next chairman of the central bank.
Investors view Warsh as an inflation hawk whose appointment suggests a stronger dollar and more stable monetary policy. The dollar strengthened against other currencies on its way to its best day since May. By midday in New York, metals prices were in free fall.
The Warsh news triggered the selling, but the magnitude of the declines was the result of the frenzied buying leading up to his nomination that lifted prices well beyond what any market fundamentals would suggest, analysts say.
The retreat continued on Monday, with all five of those metals declining less than 2% in choppy trading.
Speculative bets had reached a fever pitch
Gold’s historic rally to above $5,000 an ounce has been attributed to myriad reasons—including fears about dollar debasement, big purchases from central banks, including China, and individual investors ramping up their purchases.
The historic gains attracted increasing numbers of speculators in recent months, and not just in gold. Trading in options contracts tied to metals has surged in 2026, and so has the trading volume of funds like the ProShares Ultra Silver exchange-traded fund, which uses borrowed money or derivative contracts to double the daily returns of silver, up or down.
From mid-December to mid-January, individual investors poured nearly $1 billion into silver-linked ETFs, the heaviest 30-day buying period in history, according to Vanda research.
What goes up fast often comes down quickly too
The leveraged silver ETF performed as intended on Friday: It crashed 60%, roughly doubling silver futures’ 31% loss. The fund, which had more than $5 billion in assets before Friday’s plunge, is one example of the debt-fueled bets tied to metals that likely contributed to their rise and subsequent violent correction. Some on Wall Street said trend-following trading programs and other fast-money players unwinding positions might have exacerbated moves.
The speed of the decline “suggests that some forced selling occurred as prices dropped quickly and traders faced margin calls,” Gene Goldman, chief investment officer at Cetera Investment Management, wrote Friday.
Speculation in China got frenzied
Some of the most extreme speculation appears to be coming from China, where the silver market is at the epicenter of a metals mania and citizens have been lining up in person to buy bars and coins.
The frenzy has pushed local silver prices to a big premium over those in other trading hubs, such as New York and London. Last week, Chinese border police foiled an effort by two men attempting to smuggle 500 pounds of silver into the country from Hong Kong.
Several Chinese banks on Monday warned of volatility risks in the precious-metals market, and some have tightened margin requirements, limiting how much customers can borrow to buy metals.
China suspended trading of five commodity funds on Friday, including a UBS silver futures fund, to curb the risks of investment mania, according to state media.
“A quick anatomy of the selloff shows Chinese trademarks,” wrote Ben Emons, founder of FedWatch Advisors.
Wall Street is still bullish
Despite the selloff, Wall Street remains high on the prospects for metals prices. That is especially true for copper and gold, a much safer bet to keep up with inflation than silver, which would need to rise above $200 an ounce to threaten its inflation-adjusted 1980 high.
Miners and analysts anticipate soaring copper demand to produce electric vehicles, renewable energy and data centers—not to mention all the wiring and plumbing needed to keep pace with population growth and rising living standards in the developing world. S&P Global estimates copper demand will rise 50% by 2040, while mining output dwindles, resulting in a 25% shortfall.
Gold, meanwhile, is likely to remain the safe haven of choice for investors around the world as geopolitical flashpoints have been multiplying. Its price is at a record in both real and nominal terms, unlike silver. And while central banks bought less gold in 2025 than in prior years as they diversified their reserves away from dollar-based assets, analysts expect them to remain major sources of demand, keeping a floor beneath prices.
Deutsche Bank analyst Michael Hsueh wrote Monday the bank upheld its recent forecast for gold to reach $6,000 this year. Greg Shearer, JPMorgan’s head metals analyst, said that because of the burst of demand from investors to start 2026, the bank now expects gold to push past $6,000 in the second half of the year.
Write to Ryan Dezember at ryan.dezember@wsj.com and Jack Pitcher at jack.pitcher@wsj.com