What caused Canadian stocks to experience their worst day since April?

Canadian stocks experienced their worst day since April due to a significant slide in precious metals miners, triggered by collapsing gold and silver prices.

Why did gold and silver prices experience record declines?

Gold and silver prices experienced record declines following a rebound in the US dollar, which was influenced by the US President's intention to nominate Kevin Warsh as the new Federal Reserve chair.

What were the impacts of the Federal Reserve chair nomination on the market?

The nomination of Kevin Warsh as Federal Reserve chair was perceived as positive for the US dollar and negative for precious metals, as he is considered a strong inflation fighter, potentially leading to policies that would underpin the dollar.

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Gold & Silver Plunge: Fed Pick Triggers Market Shock

31 Jan

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Summary

Canadian stocks experienced their worst decline since April.
Gold and silver prices experienced record intraday declines.
A US dollar rebound, linked to a Fed chair nomination, fueled the sell-off.

Gold & Silver Plunge: Fed Pick Triggers Market Shock

Canadian stocks registered their most significant drop since April, with the S&P/TSX Composite index falling 3.3% on Friday. The decline was heavily influenced by a dramatic slump in precious metals miners after gold and silver prices experienced historic intraday losses, halting a recent rally.

Gold prices tumbled over 12%, falling below $5,000 an ounce, while silver saw a record intraday decline of up to 36%. This sharp reversal occurred as the US dollar rebounded strongly, influenced by President Trump's announcement of his intention to nominate Kevin Warsh as the next Federal Reserve chair. Investors had previously favored metals amid concerns about currency debasement and geopolitical tensions.

The nomination of Warsh, perceived as a strong inflation fighter, raised expectations of a monetary policy that would strengthen the dollar and consequently weaken dollar-denominated bullion. This market reaction, coupled with potential month-end rebalancing, contributed to unwinding the consensus macro trade of a weaker dollar and higher precious metals prices.