Global markets came under pressure on Monday following renewed focus on former US Federal Reserve official Kevin Warsh’s changing monetary policy stance, which triggered a sharp sell-off in precious metals and weighed on equities and commodities.
Warsh, who was considered one of the more hawkish voices during his time at the Federal Reserve, had opposed interest rate cuts during the 2008 global financial crisis due to concerns over inflation.
According to Invesco analyst Brian Levitt, Warsh’s past record appeared to contrast with former US President Donald Trump’s preference for lower interest rates.
“At first glance, his monetary policy track record would seem to conflict with Trump’s desire for lower rates, although his tone has shifted in recent months,” Levitt said.
Levitt added that Warsh is now in favour of greater policy easing in 2026, arguing that productivity gains could support stronger US economic growth without triggering higher inflation.
The announcement sparked heavy selling in dollar-priced precious metals. Gold fell as much as 12 per cent on Friday, while silver dropped more than 30 per cent at one point.
Losses extended into Monday, with gold sliding a further six per cent to $4,586 and silver briefly shedding about 11 per cent to $75.
Although both metals recovered slightly, they remained well below last week’s record highs of $5,595 for gold and $121 for silver.
Easing geopolitical tensions involving Iran further reduced demand for safe-haven assets, adding to the selling pressure.
Equity markets in Asia also traded lower in early dealings around 0430 GMT.
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Japan’s Nikkei 225 declined 0.7 per cent to 52,961.62, Hong Kong’s Hang Seng Index fell 2.4 per cent to 26,730.78, while Shanghai’s Composite Index dropped 1.3 per cent to 4,063.54.
In currency markets, the euro rose slightly against the dollar to $1.1867, while the pound slipped to $1.3686. The dollar strengthened against the yen, trading at 154.96 yen.
Oil prices recorded sharp losses, with US West Texas Intermediate crude falling 4.7 per cent to $62.15 per barrel and Brent crude dropping 4.5 per cent to $66.20.
On Wall Street, the Dow Jones Industrial Average closed 0.4 per cent lower at 48,892.47, while London’s FTSE 100 ended 0.5 per cent higher at 10,223.54.
Market sentiment remained cautious as investors weighed shifting interest rate expectations, easing geopolitical risks and the outlook for global economic growth.