Markets Rocked by Violent Reversals: Gold, Silver, and Bitcoin Crater While Dollar Surges on Fed Pick
Published Date: 31 Jan, 2026
January 31, 2026
Financial markets delivered a bruising end to January as precious metals and cryptocurrencies suffered some of their most severe single-day declines in years, while the U.S. dollar posted its strongest rally in months. The catalyst centered on President Donald Trump's nomination of Kevin Warsh to lead the Federal Reserve, a move that eased earlier fears of aggressive dovish shifts and sparked broad profit-taking across risk-sensitive assets that had enjoyed extraordinary runs.
The S&P 500 slipped 0.5 percent to settle near 6,935, trimming monthly gains but still closing January higher overall. Technology and growth stocks bore the brunt of selling pressure, reflecting shifting expectations around monetary policy trajectory.
Precious Metals Plunge in Historic Correction
Gold prices collapsed dramatically, falling more than 9 percent to trade around 4,850 to 4,920 U.S. dollars per ounce after touching record levels above 5,600 earlier in the month. The drop represented one of the sharpest percentage declines since the post-financial-crisis era, wiping out roughly 500 dollars per ounce in a single session.
Silver endured an even more punishing reversal, plunging approximately 28 percent to hover near 82 to 86 dollars per ounce, shedding more than 30 dollars from recent peaks. The metal's steeper fall widened the gold-silver ratio above 58, underscoring vulnerability to industrial demand concerns and leveraged position unwinding.
Despite the carnage, both metals retained substantial monthly advances, with gold up roughly 12 percent and silver gaining more than 15 percent for January, driven by earlier safe-haven flows and central bank buying.
Cryptocurrencies Extend Sharp Downtrend
Bitcoin traded near 81,500 U.S. dollars, down about 3 percent on the day and extending losses from mid-January highs above 105,000. The leading digital asset has now given back more than 20 percent from its recent peak, with spot exchange-traded funds recording heavy outflows exceeding 900 million dollars in recent sessions.
Ethereum fell roughly 4 percent to around 2,650 dollars, while the broader altcoin market saw widespread 5 to 12 percent declines. Total crypto market capitalization contracted by over 6 percent amid liquidations topping 1.4 billion dollars in leveraged positions during the 24-hour period.
The sector's retreat highlighted its continued sensitivity to dollar strength and macro policy shifts, despite ongoing narratives around long-term adoption and inflation protection.
Dollar Index Powers Higher
The U.S. dollar index jumped 0.8 percent to close near 97.10, its largest daily gain since mid-December. The greenback's strength pressured commodity prices and emerging market currencies, reversing much of the weakness seen earlier in the month.
Traders attributed the move to perceptions that Warsh's leadership would maintain a more disciplined approach to rate decisions, reducing the likelihood of rapid easing that had previously weighed on the currency.
Broader Equities Finish Mixed
U.S. equities closed modestly lower across major indices. The Dow Jones Industrial Average shed 0.4 percent, while the Nasdaq Composite declined 0.7 percent amid continued rotation away from high-valuation technology names. European markets ended fractionally lower, and Asian indices showed similar caution in their respective sessions.
Volatility gauges ticked higher, with the VIX rising to around 19, signaling elevated caution heading into February.
Looking Ahead to February Uncertainty
With the Federal Reserve nomination now in play and key economic releases including nonfarm payrolls on the horizon, markets face continued choppiness. Analysts expect the corrections in metals and crypto to potentially attract dip buyers if macro signals stabilize, though dollar strength could cap near-term rebounds.
The violent unwinding of positions across multiple asset classes serves as a stark reminder of how quickly sentiment can shift when policy expectations evolve. As February begins, investors will closely monitor confirmation hearings, incoming data, and any fresh geopolitical developments for clues on whether the late-January selloff marks a healthy reset or the start of a deeper risk-off phase.
Date: 31 Jan, 2026
