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Gold and silver tumbled on Monday as the reversal of a record-breaking rally in precious metals gathered pace and reverberated across equity markets.

In early London trading, gold was down 7 per cent to $4,538 a troy ounce, while silver tumbled 13 per cent to $74, as declines that began late last week accelerated.

The metals had stormed through milestones in recent weeks in a blistering rally as geopolitical tensions and fears for the independence of the US Federal Reserve sent investors in search of haven assets.

Donald Trump’s nomination on Friday of Kevin Warsh, a former Fed governor and respected central banker, as the US central bank’s next chair had allayed fears that Jay Powell’s successor would be cowed into aggressive interest-rate cuts by the US president.

As the slide in metal prices quickened, Asian stocks fell with South Korea’s Kospi leading declines with a 5.3 per cent drop. Hong Kong’s Hang Seng index was down 3.1 per cent.

US equity futures tracking the S&P 500 and Nasdaq 100 declined 1.4 per cent and 1.8 per cent, respectively. Futures tracking the Stoxx Europe 600 dropped 0.8 per cent.

Analysts said that stocks were under pressure as investors who had borrowed to buy gold and silver were being forced to sell other assets.

“People are selling the high flyers to raise cash,” said Hao Hong, chief investment officer of Lotus Asset Management, referring to the decline in equity markets in Asia.

“Now you have to replenish a lot of margin on your precious metal trades,” he added.

On Friday CME Group, the world’s largest operator of derivatives exchanges, raised margin requirements on gold and silver futures following the steep fall in precious metal prices.

“If they bought on leverage they would need to top up and need to liquidate,” said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management. “I think those margin changes have to have an impact [on asset prices] in the short term.”

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The dollar edged up 0.2 per cent against a basket of its key trading partners on Monday while yields on 10-year US Treasuries fell 0.02 percentage points to 4.21 per cent. Bond yields move inversely to prices.

Rising demand from private investors buying exchange traded funds and physical bullion had added to the rally. Investors have cited gold as a hedge against mounting concerns over increased fiscal spending in developed economies as well as geopolitical uncertainty.

Raymond Cheng, chief investment officer for north Asia at Standard Chartered, said gold trading at $4,650 was “an opportunity to add” the metal amid uncertainty about government spending in the US.

“We think the Trump risk premium is still warranted,” said Cheng. “He will stay as the US president no matter who the Fed chair [is]. His fiscal policy will remain expansionary.”

Gold mining stocks also slid, with the Australian-listed shares of Newmont Corporation falling 10 per cent and those of Zijin Gold International slipping 5.6 per cent.

“Markets that go up this much don’t correct sideways,” said BNP’s Bhayani. “It’s no different from meme stocks.”