The precious metals market suffered one of its most violent reversals on record on Friday, as gold and silver prices collapsed in a dramatic unwind of trades that had defined much of this year’s global macro landscape.

What unfolded was not merely a technical correction but a sharp reassessment of monetary policy risk, investor positioning, and the fragility of liquidity in markets that had been driven into near-parabolic territory.

Gold futures fell as much as 11% intraday, sliding below $4,900 per troy ounce and erasing a substantial portion of their year-to-date gains in a single session. In the spot market, gold recorded its largest daily percentage decline since the early 1980s, a period associated with the aftermath of Paul Volcker’s aggressive interest-rate campaign. Silver’s decline was even more extreme. Futures plunged more than 25%, the largest one-day fall on record, after prices had surged to an extraordinary $120 per ounce just a day earlier.

The selloff coincided with a broader risk-off move across global markets. U.S. equities fell sharply, the dollar stabilized after weeks of weakness, and volatility spiked as investors digested President Donald Trump’s decision to nominate Kevin Warsh as the next chair of the Federal Reserve. While Warsh is expected to support interest-rate cuts later this year, his reputation as a policy hawk and a defender of central bank credibility altered a narrative that had become deeply embedded in markets.

For months, gold and silver had been beneficiaries of a powerful convergence of themes. Persistent U.S. fiscal deficits, concerns about political influence over monetary policy, aggressive central bank gold buying, and a weakening dollar all reinforced the idea that precious metals offered protection against inflation, currency debasement, and systemic risk. The Federal Reserve’s decision earlier this week to keep rates unchanged, coupled with comments from outgoing Chair Jerome Powell that did little to arrest the dollar’s slide, helped push gold above $5,500 and silver to levels unseen in modern trading history.

That surge, however, left markets increasingly one-sided. Positioning data and anecdotal evidence suggested that hedge funds, commodity trading advisors, and retail investors were heavily concentrated in long precious metals trades. In that context, even a modest shift in expectations had the potential to trigger a disorderly exit.

The nomination of Warsh acted as that catalyst. Strategists noted that while the pick does not immediately change policy, it eased fears that the Fed would permanently abandon its inflation-fighting mandate under political pressure. The perception that central bank independence would remain intact weakened one of the core psychological drivers of the metals rally: the belief that real rates would stay deeply negative for an extended period.

Mike McGlone, senior commodity strategist at Bloomberg, said the scale and speed of the rally had made a sharp pullback almost inevitable. He argued that history shows periods of explosive price appreciation in metals often precede enduring peaks, particularly for silver, which tends to exaggerate both upside momentum and downside reversals. In his assessment, the market had reached a point where bullish fundamentals were no longer sufficient to justify the pace of gains.

Liquidity dynamics compounded the move. Ole Hansen, head of commodity strategy at Saxo Bank, had warned earlier this week that volatility itself had become a risk factor. As price swings widened, bid-ask spreads thinned, and market depth deteriorated, creating conditions where selling pressure could cascade rapidly. On Friday, that feedback loop was on full display, with stop-loss orders, margin calls, and forced liquidations amplifying losses.

The reversal also exposed tensions between short-term market psychology and longer-term fundamentals. Just days earlier, Goldman Sachs had reiterated a bullish outlook for gold, setting a year-end price target of $5,400 and pointing to increased participation from private-sector investors as a key upside risk.

Central bank demand, particularly from emerging markets seeking to diversify away from the dollar, remains structurally strong. From that perspective, Friday’s collapse does not negate the broader strategic case for gold, but it does challenge the assumption that prices can rise in a straight line.

Silver’s fall was particularly striking because its rally had been fueled by both monetary and industrial narratives. In addition to serving as a hedge against currency weakness, silver has benefited from expectations of rising demand tied to electrification, solar power, and advanced manufacturing. That dual role makes the metal especially sensitive to shifts in macro sentiment. When confidence falters, silver often behaves less like a store of value and more like a high-beta risk asset, a pattern that reasserted itself forcefully during the selloff.

Robin Brooks of the Brookings Institution had noted earlier in the week that the rally in gold was a clear signal of entrenched conviction in the “dollar-down trade.” Friday’s reversal suggests that conviction was vulnerable once markets began to question whether policy outcomes would be as one-sided as investors had assumed. Even a partial stabilization in the dollar was enough to trigger a rapid reassessment of risk.

By the end of the session, silver was trading near $83 per ounce, still elevated by historical standards but dramatically lower than its recent peak. Despite the collapse, the metal remains modestly higher for the year, following an extraordinary run in 2025. JPMorgan analysts had cautioned earlier this month that prices had already overshot forecasted averages, while acknowledging that markets exhibiting near-parabolic momentum are notoriously difficult to time.

Analysts believe the broader lesson from the rout is less about any single policy decision and more about the dangers of crowded trades in an environment of heightened uncertainty. Gold and silver had become emblematic of a global macro bet on falling real rates, sustained dollar weakness, and diminishing confidence in fiat currencies. Once that narrative was even slightly challenged, the unwind was swift and unforgiving.

A quiet but consequential dispute between the Pentagon and artificial intelligence startup Anthropic is emerging as an early stress test of how far Silicon Valley is willing to go in accommodating U.S. military and intelligence demands as AI systems become more powerful — and more politically sensitive.

According to people familiar with the matter who spoke to Reuters, the U.S. Department of Defense is at odds with Anthropic over safeguards the company wants to preserve in its AI models, particularly restrictions that would prevent the technology from being used to autonomously target weapons or conduct domestic surveillance. The disagreement has stalled negotiations under a contract worth up to $200 million and has placed the two sides at a standstill after months of talks.

At its core, the clash reflects a deeper tension between commercial AI developers seeking to enforce ethical boundaries and a Pentagon increasingly determined to integrate cutting-edge AI into warfare, intelligence analysis, and operational planning with minimal external constraints.

Pentagon officials argue that as long as deployments comply with U.S. law, the military should be free to use commercial AI tools regardless of the usage policies set by private companies. That position is grounded in a January 9 Pentagon memo on AI strategy, which asserts broad authority to deploy advanced technologies to maintain U.S. military superiority.

Anthropic, however, has pushed back. Company representatives have raised concerns that its models could be used to surveil Americans or assist in weapons targeting without sufficient human oversight, according to sources familiar with the discussions. Those objections go beyond abstract ethical debates. They cut directly into how AI might be operationalized in real-world military and domestic-security contexts, especially as autonomous systems move closer to deployment readiness.

The Pentagon’s frustration is compounded by a practical reality that it cannot easily bypass Anthropic. The company’s models are trained with built-in safeguards designed to avoid harmful outcomes, and Anthropic engineers would likely need to modify or fine-tune those systems for military use. Without the company’s cooperation, Pentagon ambitions to fully integrate Anthropic’s technology could stall.

Anthropic, for its part, has sought to strike a careful balance. In a statement, the company said its AI is “extensively used for national security missions by the U.S. government” and that it remains in “productive discussions” with the department, which the Trump administration has controversially renamed the Department of War.

The dispute comes at a particularly sensitive moment for the San Francisco-based startup. Anthropic is preparing for an eventual public offering and has invested heavily in courting national security contracts, seeing them as both lucrative and strategically important. The company has also positioned itself as a thought leader in AI governance, seeking influence over how governments define acceptable use of powerful models.

That ambition now risks colliding with political reality. The Trump administration has signaled a more aggressive posture on national security technology, emphasizing speed, dominance, and flexibility over restraint. In that environment, corporate efforts to impose limits on military use can be framed as obstruction rather than responsibility.

Anthropic’s stance is shaped by its leadership. CEO Dario Amodei has been explicit about where he believes lines should be drawn. Writing on his personal blog this week, Amodei argued that AI should support national defense “in all ways except those which would make us more like our autocratic adversaries.” The remark encapsulates the company’s fear that unchecked AI deployment could erode democratic norms, even when pursued in the name of security.

Those concerns have been sharpened by recent domestic events. Amodei was among Anthropic’s co-founders who publicly condemned the fatal shootings of U.S. citizens protesting immigration enforcement actions in Minneapolis, calling the deaths a “horror.” That episode has amplified anxiety within parts of Silicon Valley about government use of AI tools in contexts that could enable or legitimize violence against civilians.

The Pentagon’s dispute with Anthropic is also notable for what it signals about the broader AI landscape. Anthropic is one of several major developers awarded Pentagon contracts last year, alongside Google, Elon Musk’s xAI, and OpenAI. Yet not all AI companies approach military engagement the same way. Some are more willing to defer to government judgment, while others, like Anthropic, are attempting to hard-code ethical limits into their technology.

Currently, it is not clear if that approach is sustainable. But as AI systems become more central to defense planning, intelligence analysis, and battlefield decision-making, the leverage is expected to increasingly shift toward the government, which controls contracts, classification access, and long-term deployment opportunities.

Still, the current standoff suggests the outcome is not predetermined. The Pentagon’s need for state-of-the-art AI gives companies like Anthropic bargaining power, at least for now. The disagreement also highlights an unresolved question that will shape U.S. military AI policy for years: who ultimately decides how autonomous systems are used — elected governments, military planners, or the private companies that build the technology?

Some believe the answer could determine not only the future of Anthropic’s Pentagon business, but also its credibility as a company that claims it can pursue scale, profit, and national security relevance without abandoning its ethical red lines.