Key Takeaways
- Spot gold plummeted over 4% on Friday, breaking below the psychological $5,200 mark, as a strengthening U.S. dollar and aggressive profit booking weighed heavily on the precious metal.
- Reports circulating about former Federal Reserve governor Kevin Warsh as a potential nominee for the next Fed chair fueled a rally in the dollar, contributing to gold's sharp decline.
- Hong Kong's economy demonstrated robust growth in the third quarter of 2025, expanding by 3.8% year-on-year, significantly surpassing the estimated 3.0% and marking an eleventh consecutive quarter of growth.
Spot gold prices experienced a significant downturn on Friday, dropping by over 4% during the Asian trading session and falling below the $5,200 per ounce level. This sharp correction comes after both gold and silver had recently surged to historic highs, prompting aggressive profit booking among investors. Gold futures on the Multi Commodity Exchange (MCX) also saw a decline of over 4%, with silver futures slipping more than 5%.
The primary catalyst for gold's decline was a rebound in the U.S. dollar, which strengthened after stabilizing following the Federal Reserve's latest policy decision. A firmer dollar typically makes dollar-denominated commodities like gold less attractive to international investors. Adding to market volatility were reports suggesting that former Fed governor Kevin Warsh is being considered as a nominee for the next Federal Reserve chair by Donald Trump. Such a nomination is perceived by some as a "game-changer" for future rate cut expectations, indirectly impacting precious metals.
Despite Friday's sharp fall, precious metals have seen a strong performance year-to-date. Silver, for instance, remains up over 50% in January, marking its strongest monthly performance on record, while gold also maintains significant gains. The broader rally in precious metals has been underpinned by ongoing geopolitical tensions, economic uncertainties, strong investment flows, and tight physical supply.
In other economic news, Hong Kong's economy delivered a stronger-than-expected performance in the third quarter of 2025, with its real Gross Domestic Product (GDP) expanding by a robust 3.8% year-on-year. This figure exceeded economists' average forecast of 3.0% and marked the eleventh consecutive quarter of economic growth for the Special Administrative Region.
The impressive growth was largely driven by a sustained surge in exports and a continued expansion in domestic demand. Exports of goods notably grew by 12.1% year-on-year in real terms, fueled by strong demand for electronics-related products and buoyant regional trade flows across Asia. Additionally, exports of services expanded by 6.3% in real terms, supported by increased inbound tourism, cross-boundary traffic, and vibrant cross-boundary financial activities. Private consumption expenditure also contributed positively, rising by 2.1% year-on-year, alongside an accelerated increase of 4.3% in overall investment expenditure. Looking ahead, the Hong Kong government holds a cautiously optimistic view for the remainder of 2025, having revised its full-year growth forecast upward to 3.2%.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.