Commodities Plunge After Warsh is Selected to be U.S. Fed Chair

Commodities faced sharp declines on Monday after Kevin Warsh was selected as the next U.S. Federal Reserve chair, triggering significant selling in risk assets. Gold dropped 5%, reaching its lowest level in over two weeks, while silver fell more than 7%, following their recent record highs. Oil prices eased nearly 5%, and copper on the London Metal Exchange fell by 3%. The market’s reaction indicates that investors perceive Warsh's appointment as a sign of tighter monetary policy, which could keep interest rates elevated and strengthen the dollar, diminishing the allure of precious metals. The CME Group's increase in margin requirements added to the selling pressure, leading to the steepest one-day drop in spot gold since 1983. Meanwhile, easing tensions between the U.S. and Iran further impacted energy markets, alleviating supply concerns.