GOLD prices fell sharply on Friday, extending their first decline in nearly two weeks, as a strengthening US dollar and reports of an imminent Federal Reserve leadership change triggered a broad sell-off across precious metals. The sudden reversal followed a record-breaking rally and underscored the extreme volatility that has gripped commodity markets in recent weeks.

Bullion dropped as much as 4.8 percent during the session after initially climbing by as much as 1.4 percent, reflecting rapidly shifting investor sentiment. The dramatic intraday swings came just one day after gold surged to a new high, highlighting how quickly momentum has turned. Analysts said the sharp move was less about a single headline and more about a long-awaited correction after weeks of strong gains.

The immediate catalyst was a report from Bloomberg News that the Trump administration is preparing to nominate Mr Kevin Warsh as the next chair of the US Federal Reserve. The news pushed the US dollar higher, with a key dollar index rising by as much as 0.5 percent. A stronger dollar typically weighs on gold, as it makes the metal more expensive for investors using other currencies, Yahoo Finance reported.

Mr Warsh is known as an inflation hawk (focused on fighting inflation), a stance that has traditionally implied support for tighter monetary policy. However, he has recently aligned himself with President Donald Trump’s calls for lower interest rates, creating uncertainty about how he might steer the central bank if confirmed. Trump said he would announce his nominee on Friday morning US time, adding to speculation and market tension.

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A strategist at Oversea-Chinese Banking Corp., Mr Christopher Wong, said the market reaction was a reminder of how fragile fast-moving rallies could be. “This validates the cautionary tale of fast-up, fast-down,” he said. While the report about Mr Warsh might have been the trigger, Wong noted that the gold market was already ripe for a pullback after its parabolic rise. “It’s one of those excuses markets are waiting for to unwind,” he added.

Despite the sharp drop, gold remains firmly higher for the year, with gains of more than 20 percent. The rally has been driven by a mix of geopolitical tensions, aggressive trade policies, and growing concerns about the independence of the Federal Reserve. Trump’s repeated public criticism of the central bank, along with his willingness to disrupt long-standing international relationships, has increased demand for safe-haven assets such as gold.

Global political risks remain elevated. Trump recently threatened to take military action against Iran, while also announcing plans to impose tariffs on countries that supply oil to Cuba. These moves have added to fears of renewed global trade conflict. Earlier tariff threats aimed at Europe, Canada, and South Korea have also shaken investor confidence, reinforcing gold’s role as a hedge against political and economic instability.

In the United States, domestic political uncertainty has also weighed on markets. A potential government shutdown was narrowly avoided after Trump and Senate Democrats reached a tentative agreement. However, negotiations are still ongoing over proposed limits on immigration raids, which have triggered widespread protests and national debate.

Even with these supportive factors, the scale of gold’s recent rise made a correction almost inevitable, according to analysts. Rapid price increases often attract short-term traders, making the market vulnerable to sharp reversals when sentiment shifts.

As of 12:05 p.m. in Singapore, spot gold was down 3.1 percent at $5,208.93 an ounce. Silver fell 4.9 percent to $110.0425, reflecting similar pressure across the precious metals complex. The Bloomberg Dollar Spot Index rose 0.3 percent on the day, though it remains down about 1 percent for the week. Platinum and palladium also posted significant losses.

While the short-term outlook remains volatile, many investors continue to see gold as a long-term store of value in an increasingly uncertain world. The latest pullback, analysts say, may be less a sign of weakness and more a pause after an extraordinary rally.