Gold Caps Decline

  

Gold Trims Intraday Losses as Dovish Fed Bets and Weaker USD Offset Risk Appetite; Slips Below $5,050

Gold (XAU/USD) pared most of its early losses after dipping below the key psychological $5,000 level and trades with modest intraday weakness ahead of the European session on Tuesday. The outcome of Japan’s snap election on Sunday helped ease political uncertainty, while signs of easing tensions in the Middle East continue to support broader risk sentiment. This combination has reduced demand for traditional safe-haven assets, putting mild downward pressure on gold prices.

However, expectations that the US Federal Reserve (Fed) will deliver at least two 25-basis-point interest rate cuts in 2026 continue to cap losses in the non-yielding metal. Renewed concerns over the Fed’s independence have also kept the US Dollar (USD) under pressure near a one-week low, providing underlying support to gold. Traders remain cautious and reluctant to place aggressive directional bets ahead of key US economic data, including the Nonfarm Payrolls (NFP) report on Wednesday and US Consumer Price Index (CPI) inflation figures due on Friday.

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Daily Market Drivers: Gold Sellers Hesitate as Fed-Driven USD Weakness Counters Positive Risk Tone

• Indirect talks between the US and Iran regarding the future of Iran’s nuclear program concluded on Friday with a broad agreement to keep diplomatic channels open. This development eased fears of military escalation in the Middle East, boosting investor confidence and reinforcing risk-on sentiment during the Asian session on Tuesday, which weighed on demand for safe-haven gold.

• Iranian Foreign Minister Abbas Araghchi described the eight-hour negotiations as a “good start” conducted in a constructive atmosphere. US President Donald Trump also characterized the talks as “very good” and confirmed that further meetings are scheduled for later this week.

• Meanwhile, concerns over the independence of the US Federal Reserve resurfaced after Trump stated on Saturday that he could challenge newly nominated Fed Chair Kevin Warsh if interest rates are not lowered. Adding to the uncertainty, US Treasury Secretary Scott Bessent did not rule out the possibility of a criminal investigation should Warsh ultimately refuse to cut rates.

• These developments come amid growing expectations that the Fed will cut interest rates twice more this year, with the first reduction likely as early as June. This outlook has pushed the US Dollar to its lowest level in over a week, supporting gold prices and limiting deeper downside in XAU/USD.

• The week begins with the release of US monthly Retail Sales data later on Tuesday during the North American session. However, market focus remains firmly on the highly anticipated US labor market report (NFP) on Wednesday and CPI inflation data on Friday, both of which are expected to drive USD volatility and provide fresh directional cues for gold.

• Adding to the bullish undertone, the People’s Bank of China (PBOC) reported on Saturday that it extended its gold purchases for a 15th consecutive month in January, underscoring steady demand amid fiscal concerns across major economies. Separate reports also suggest that Chinese regulators have advised financial institutions to limit exposure to US Treasuries due to concentration risks and market volatility.

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CME Raises Margins

  

CME Raises Futures Margin as Gold and Silver Prices Swing Sharply

The precious metals market has experienced extreme volatility over the past several trading sessions, including on Friday (Feb 6). Gold and silver prices recorded their steepest daily declines in decades, after previously touching record-high levels.

According to Reuters, spot gold surged 2.6% to US$4,894.99 per ounce, while spot silver jumped 5.5% to US$75.15.

Meanwhile, gold futures edged up 0.4% to US$4,905.8, whereas silver futures moved in the opposite direction, falling 3% to US$74.46.

In response to the heightened market turbulence, CME Group has once again raised margin requirements for gold and silver futures contracts. The move aims to mitigate risk amid sharp price fluctuations in the precious metals market.

Margin refers to the collateral funds that futures investors must deposit with exchanges or clearing houses to guard against default risk. Exchanges typically increase margin requirements when price movements become excessively volatile.

Under the latest adjustment, COMEX 100 Gold Futures saw both initial and maintenance margins raised to 9% for accounts classified as Non-Heightened Risk Profile (Non-HRP). Meanwhile, COMEX 5000 Silver Futures had their initial and maintenance margins increased to 18%.

CME has also revised its margin calculation methodology for precious metals futures. Margins are now set as a percentage of contract value, replacing the previous system that used fixed dollar amounts.

Since implementing the new methodology, CME has raised margin requirements three times, underscoring the intense volatility pressure currently gripping the global gold and silver markets.

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Gold Silver Slump

 

Gold and Silver Prices Slide Sharply as Strong Dollar Pressures Precious Metals

Global gold and silver prices extended their losses in Friday’s trading (February 6), weighed down by a stronger U.S. dollar and a broad sell-off in global technology stocks. The decline erased most of the gains recorded during the precious metals’ brief rebound earlier this week.

According to Reuters, spot gold fell 0.7% to US$4,735.99 per ounce, while gold futures dropped a sharper 2.8% to US$4,752.40. Spot silver plunged 3.2% to US$68.97 per ounce.

Among other precious metals, spot platinum slid 3.6% to US$1,916.45, while palladium bucked the trend, rising 1.3% to US$1,638.25.

The pressure stemmed largely from weakness in global equity markets. The MSCI index declined amid growing concerns over the massive investment costs associated with artificial intelligence (AI). Technology stocks once again led the sell-off, while investors shifted toward government bonds following labor market data that signaled softening economic conditions.

The U.S. dollar index climbed to a two-week high, supported by heightened stock market volatility. A stronger dollar typically weighs on dollar-denominated commodities, including gold and silver.

In the United States, job openings fell by 386,000 to 6.542 million at the end of December, marking the lowest level since September 2020. Historically, a weakening labor market increases expectations for interest rate cuts to support job creation.

Investors are currently pricing in at least two interest rate cuts of 25 basis points in 2026, with the first expected as early as June. In a low-interest-rate environment, gold—being a non-yielding asset—tends to become more attractive to investors. 

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Gold Pressured Dollar

 

Gold Prices Slip as Stronger US Dollar and Fed Signals Weigh

Gold prices edged lower on Thursday (Feb 5), falling around 0.35% to approximately US$4,930 per troy ounce, ending a two-day rally. The decline was driven by a stronger US dollar after the Federal Reserve signaled caution over further interest rate cuts.

According to Trading Economics, Fed Governor Lisa Cook stated that she would not support additional rate cuts at this stage, emphasizing persistent inflation risks over emerging signs of a slowdown in the labor market.

Market sentiment was further influenced by President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh is widely viewed as more hawkish than other candidates, prompting investors to price in a slower pace of potential rate cuts.

On the data front, the ADP employment report showed weaker-than-expected private payroll growth, while the ISM services PMI surprised markets with a stronger-than-forecast increase.

Geopolitical tensions between the United States and Iran also remained elevated, despite plans for nuclear talks in Oman scheduled for Friday. Washington has not ruled out the possibility of military action.

Earlier this week, gold prices surged more than 6%, marking the largest intraday gain since 2008. The rally was fueled by bargain hunting following a sharp correction from last weekend’s record highs.

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Gold Breaks $5,000

  

Gold Prices Surge, Break Above US$5,000 Again

Global gold prices surged sharply in Wednesday’s trading (February 4), reclaiming the key US$5,000 level. The rally was supported by bargain hunting activity and a weaker US dollar, which made the precious metal more attractive to global investors.

According to Reuters, spot gold jumped 2.2% to US$5,044.74 per ounce, while gold futures climbed 2.7% to US$5,067.00.

Other precious metals also recorded solid gains. Spot silver rose 2.1% to US$86.92, platinum advanced 2.3% to US$2,260.50, and palladium surged nearly 3% to US$1,782.85.

The surge in gold prices came as the US dollar weakened, prompting investors to consolidate positions after the dollar’s previous rally, which had been fueled by strong economic data and expectations of a less dovish stance from the Federal Reserve (Fed).

A softer dollar makes gold, which is priced in greenbacks, cheaper for holders of other currencies, thereby boosting demand.

Meanwhile, US President Donald Trump has signed a spending bill that ended the partial US government shutdown. However, the closely watched employment report will not be released this week due to disruptions during the shutdown period.

At the same time, investors have increased bets on higher long-term US Treasury yields and a steeper yield curve. Kevin Warsh, the nominee for Fed Chair, is expected to support interest rate cuts while continuing the central bank’s balance sheet reduction.

Market participants are currently pricing in at least two Fed rate cuts in 2026 and are awaiting private-sector employment data for further clues on the future direction of monetary policy. As a non-yielding asset, gold tends to perform better in a low-interest-rate environment.

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Gold and Silver Prices Rebound

 

 After Sharp Sell-Off, Global Gold and Silver Prices Rebound Up to 5%

Gold and silver prices rebounded in Tuesday’s trading (February 3) after sharp turbulence in the metals market began to ease. Market sentiment was further supported by a surge in manufacturing activity in the United States.

According to Reuters, gold prices rose around 3% to US$4,800, while silver jumped about 5% to US$83.34.

Both metals had previously experienced extreme volatility following the nomination of Kevin Warsh to the Federal Reserve. Market participants believe Warsh may push for balance sheet reduction at the central bank and higher bond yields—conditions that typically weigh on precious metals, as gold and silver do not offer interest income.

However, investors assessed that the recent price declines had gone beyond fundamental factors. The sell-off was largely driven by widespread liquidation of leveraged positions, which then rattled global commodity and equity markets as investors sold other assets to cover losses.

“That was a process of clearing out the leverage that had built up in the system,” said Christopher Forbes, Head of Asia and the Middle East at CMC Markets.

Forbes added that not all market participants have been able to withstand the pressure from the unwinding of gold and silver positions.

From the United States, the Purchasing Managers’ Index (PMI) showed that factory activity expanded for the first time in a year in January.

Meanwhile, markets also reacted to the announcement of a trade agreement between the United States and India.

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