Gold and silver prices have continued to fall, deepening a dramatic reversal of a rally that pushed precious metals to record highs.

Prices reached fresh records in January as investors parked money in so-called "safe haven" assets amid geopolitical uncertainties, but metal prices fell after Kevin Warsh was nominated to lead the US Federal Reserve.

Spot gold on Friday recorded its sharpest one-day drop since 1983 with a fall of more than 9%, while silver plunged 27% before recovering slightly on Monday.

While the dollar ticked up, the FTSE 100 shrugged off a weak start to hit new highs, closing up 1.2% at 10,341.56 points, a record close, and a new intra-day high of 10,345.48.

By 17:00 GMT on Monday, gold was down 4.6% at $4,659.16 an ounce, and silver had dropped 7.63% to $78.70.

That left both precious metals far below their respective record highs of above $5,500 and $120 reached last week.

Analysts also pointed to changes in trading requirements on a major exchange that made it more expensive for speculators to trade, thereby adding further pressure on prices.

"Many investors bought gold and silver as protection against the volatile geopolitical backdrop, yet they've learned the hard way these assets can also be volatile themselves," said Russ Mould, investment director at AJ Bell.

Markets had also been concerned about the independence of the US Federal Reserve, but the appointment of Warsh, a former central bank governor, on Friday was generally welcomed by financial markets and triggered a 1% rise in the US dollar's value.

The choice also eased concerns about the Fed's independence following a series of attacks on Federal Reserve Chair Jerome Powell for his reticence to cut rates as quickly as the president wanted.

Despite the sharp falls, the price of gold has only fallen back to where it was a couple of weeks ago, and it is still about 70% higher than it was at the same point last year.

In addition to a continued sell-off in commodities on Monday, Asian stocks fell, with South Korea's benchmark Kospi leading the losses, down 5%. Elsewhere in the region, the Hang Seng in Hong Kong dropped 2%, and Japan's Nikkei 225 was more than 1% lower.

In Europe, the UK's FTSE 100 index initially fell but then recovered, rising 1.2%. The decline in commodity prices put mining companies under pressure, and gold miners Fresnillo and Endeavour Mining declined by more than 2%.

U.S. stock markets dipped initially but then saw modest gains, with the S&P 500 index closing 0.5% higher.

In global energy markets, the price of crude oil fell nearly 5%. This is attributed to several factors, including major oil producers agreeing to keep output unchanged and signs of de-escalation of tensions between the US and Iran.

The rise in the value of the US dollar may also have had an impact, as oil prices are denominated in dollars, making them more expensive for non-US buyers.

Precious metals had a blockbuster year in 2025, with gold seeing its biggest annual gain since 1979.

One of the biggest appeals of gold is its relative scarcity. Only around 216,265 tonnes of the metal have ever been mined, according to the World Gold Council trade association.

Bitcoin falls

Bitcoin tumbled below $75,000 on Monday, following a slide on Friday, as investors pulled back from risky assets and progress on US cryptocurrency legislation stalled.

Digital currencies soared after Trump was re-elected in November 2024, as he was widely viewed as a strong supporter of the sector.

But the price of Bitcoin has now slipped back to pre‑election levels, as many investors rushed to sell off risky assets.

Additionally, efforts to regulate cryptocurrency have stalled in the U.S. Senate, adding uncertainty.

Meanwhile, Trump's close relationship with the crypto sector - alongside ventures he has promoted since returning to office - has renewed accusations of conflicts of interest.

According to recent Bloomberg estimates, his family's fortune grew by $1.4bn last year from digital assets alone. Hours before his January 2025 inauguration, the president launched his own cryptocurrency, $TRUMP, which has since lost about 90% of its value from its peak.