Gold, silver and Bitcoin slide as hawkish Fed unwinds ‘debasement trade’

Gold, Silver and Bitcoin Plunge as Fed Chair Warsh Turns Hawkish

Gold fell below $4,000 per ounce on Wednesday for the first time since November 2025, silver breached $60 for the first time since December, and Bitcoin -2.45% slid toward the $60,000 level as the hawkish tenor of Federal Reserve Chair Kevin Warsh's debut meeting continued to reverberate through markets, unwinding what analysts have called the "debasement trade."

The Selloff

Spot gold dropped as much as 3.8% to trade below $3,960 on Wednesday before stabilizing near $3,990 on Thursday morning, according to Bloomberg. Silver futures fell below $60, touching $58.09 — their lowest since December 2025 — while Bitcoin was last trading around $60,909, down nearly 3% on the day.yahoo +2

The moves extend a punishing week for haven and alternative assets. Gold has lost roughly 8% and silver about 16% since last Wednesday, according to Forbes. The selling accelerated after Warsh's June 17 press conference, where he declared the Federal Open Market Committee "clear and unanimous" in its commitment to price stability. Updated projections from nine of 19 Fed officials now show a rate hike expected by year-end, a dramatic shift that has sent the U.S. dollar index to a 13-month high above 101.5.cnbc +3

Debasement Trade Unwinds

DBS Group Research noted on June 25 that "USD debasement hedges such as gold, silver, and cryptocurrencies have declined" as political pressures on the Fed to cut rates appear to be moderating. The bank observed that Treasury Secretary Bessent's assurances of Warsh's independence from the White House have bolstered dollar sentiment.dbs

The debasement trade — a bet that fiscal dominance and financial repression would erode the dollar's purchasing power, driving capital into tangible assets — had propelled gold to a record $5,594.82 in January. Its rapid unwinding has forced banks to slash forecasts: Deutsche Bank now targets $4,300 gold in Q3, while Bank of America's prior $6,000 target "now appears improbable," according to CNBC.cnbc +2

Capital Rotation Into Chips

As money exits metals and crypto, semiconductor equities have emerged as beneficiaries. Samsung Electronics has surged 175% year-to-date and SK Hynix 308%, according to market data, even as foreign ownership in both names hit year-lows due to index rebalancing. South Korea's government is in discussions with both companies over a new chip investment cluster, Reuters reported. Nexo's market commentary described the "capital rotation toward AI-linked equities over crypto" as the "dominant force" shaping digital asset markets.reuters +2

Macquarie forecasts gold averaging $4,641 for 2026, still a 35% annual gain, but expects prices to drift lower into 2027. For now, traders are watching the $3,900 support level for gold and $60,000 for Bitcoin as the lines that could determine whether the selloff deepens.cnbc +1