On Friday, prices for gold and other metals experienced a sharp decline. The week's strong rally in the precious metals market, which had driven silver, copper, and platinum prices to record highs, was halted by news of Kevin Warsh's nomination for Federal Reserve Chair.

After surging to nearly $5,600 per troy ounce on Thursday, gold fell by as much as 8% on Friday, dropping to $4,957 per troy ounce; prices later recovered slightly, closing down 6.7% at $5,034 per troy ounce. Gold prices have recently exhibited roller-coaster-like volatility, repeatedly hitting new highs as investors, influenced by global instability and inflation concerns, sought safe-haven assets.

The significant pullback in gold prices spread across the entire precious metals sector on Friday, with silver prices falling 15% and platinum prices declining 13%.

"This is classic 'market top' behavior," stated Tom Price, a commodities analyst at Panmure Liberum. "The current market is filled with confusion and uncertainty, with everyone searching for a clear direction."

Overnight news that US President Donald Trump might nominate Warsh for the next Fed Chair spurred a strengthening of the US dollar. Trump formally confirmed the nomination on Friday.

Some investors perceive Warsh as a more orthodox economist compared to other potential candidates, and a Fed under his leadership might act more decisively to curb inflation. Concerns about a weakening US dollar have been a central argument for gold bulls over the past year.

"Given the extreme price movements seen previously, the market is expected to remain highly volatile," said Arun Sai, a senior multi-asset strategist at Pictet Asset Management. The firm maintains its view that gold will benefit from asset diversification by central bank reserve managers and other investors.

Charles-Henry Monchau, Chief Investment Officer at Swiss bank Syz, suggested that the drop in gold prices appears to reflect "stop-loss selling from the buyer camp" following a price surge that represented one of the most extreme increases relative to long-term averages in decades.

He added that this phenomenon, combined with a spike in implied volatility, indicates that "the market had become excessively overbought in the short term, necessitating a more cautious stance."