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The minutes from the January meeting of the Federal Open Market Committee revealed an economy that continued expanding at a slightly slower pace than the previous year, with policymakers viewing the labor market as stabilising after gradual cooling. Inflation remained somewhat elevated, largely driven by core goods prices influenced by tariffs, while disinflationary trends persisted in core services, particularly housing. Staff projections grew more optimistic compared with December, anticipating above-potential GDP growth through 2028 as tariff effects faded and supportive financial and fiscal conditions sustained spending. Unemployment was expected to decline below the estimated natural rate, even as risks to growth and employment were seen as skewed to the downside and inflation risks tilted upward.
Discussions highlighted growing divergence within the Federal Reserve on the appropriate rate path. Several members indicated that rate cuts would be warranted if inflation eased as expected, while others favoured holding policy steady until clearer evidence of sustained disinflation emerged, and some acknowledged that further hikes could be necessary if inflation proved persistent. The decision to hold rates passed with broad support led by Jerome Powell, though Stephen Miran and Christopher Waller dissented in favour of a quarter-point cut. Commentary from Jeffrey Roach of LPL Financial questioned the Fed’s optimism, pointing to elevated asset valuations and emerging financial-stability risks, including hedge-fund leverage and vulnerabilities in private credit, while suggesting the next rate cut may not occur until mid-year. Source
Precious metals markets have repeated their familiar pattern of gradual rallies followed by sharp declines, with January’s record highs giving way to February’s corrections, partial recoveries, and renewed volatility. Price behaviour has become increasingly difficult to interpret as speculative flows, particularly from Chinese derivatives markets, exert outsized influence often disconnected from fundamentals. While technical analysis typically looks for a 50% retracement to confirm bullish continuation, most metals have struggled to reclaim key resistance levels, creating an uncertain environment. Gold stands out as the most resilient, supported by central bank accumulation, de-dollarization dynamics, and strong physical demand across major regions despite softer seasonal buying in China.
Silver and platinum-group metals have shown greater fragility, reflecting the unwinding of leveraged speculative positions. Silver’s steep pull-back underscores how heavily January’s surge was driven by momentum rather than underlying supply deficits, even as long-term industrial demand prospects remain robust, including potential growth from solid-state battery technologies. Platinum and palladium experienced similar boom-and-bust cycles, with supportive supply conditions overshadowed by macroeconomic pressures, margin adjustments, and derivatives-driven deleveraging. The dominant theme is that short-term pricing remains governed by speculative positioning, dollar strength, and shifting rate expectations rather than structural fundamentals, leaving long-term investors focused on enduring demand trends while shorter-term participants contend with persistent volatility. Source
Gold and silver prices rebounded sharply by midday Wednesday, recovering from the prior session’s losses as traders stepped in on corrective buying and perceived bargains. April gold climbed to 5,022.50, while March silver rose to 77.81, reflecting renewed short-term optimism. Market participants turned their attention to the upcoming release of the Federal Reserve’s January policy meeting minutes, looking for signals on the future direction of interest rates. Comments from policymakers highlighted the ongoing debate, with Michael Barr favouring steady rates until inflation shows clearer progress toward the 2 percent target, while Austan Goolsbee left the door open to additional cuts if disinflation continues.
External market forces provided a mixed backdrop, as the U.S. dollar index strengthened, crude oil prices advanced, and Treasury yields hovered near recent levels. Technical indicators suggested gold futures retained a moderately bullish posture, with resistance levels ahead and support zones defining the downside risk, while silver’s chart structure appeared more neutral following recent volatility. Traders continued to weigh macroeconomic conditions, monetary policy expectations, and technical signals in assessing whether the rebound represented a temporary bounce or the start of renewed upward momentum. Source
Gold prices moved sharply higher following stronger-than-expected U.S. housing data, with housing starts rising 3.9% in November to an annualised rate of 1.322 million units and climbing further in December to 1.448 million. Both readings exceeded market forecasts, signalling unexpected resilience in the housing sector despite the pressure of elevated mortgage rates. Building permits showed a mixed but generally firmer picture, declining modestly in November yet still beating expectations, while December permits also outperformed estimates. The data suggested that home construction activity remains more stable than many economists anticipated.
The release triggered immediate market reaction, with spot gold surging to an intraday high of 4,969.10 before easing slightly. Prices remained near session highs, reflecting renewed investor interest. The housing sector, which plays a key role in overall economic growth, has struggled under the weight of higher borrowing costs following the Federal Reserve’s tightening cycle. Signs of stabilisation or improvement can influence broader market sentiment, including expectations around economic momentum, inflation pressures, and monetary policy, all of which feed directly into gold’s price dynamics. Source
Gold prices climbed toward session highs and neared $5,000 per ounce after new economic data showed U.S. durable goods orders declined less than expected. The U.S. Commerce Department reported a 1.4% drop in December, following November’s strong 5.3% increase. Although orders contracted, the decline was smaller than economists’ forecasts for a 2.0% decrease, which helped support bullish momentum in the gold market.
Underlying demand indicators showed resilience, with core durable goods orders rising 0.9%, comfortably beating expectations. Non-defense capital goods orders excluding aircraft also grew 0.6%, aligning with November’s pace and exceeding projections. Following the data release, spot gold held near its highs, trading at $4,959.21 per ounce, marking a 1.67% gain on the session. Source
Senior strategists at J.P. Morgan argue that while there are reasonable concerns about gold’s extended rally, the bearish case remains unconvincing. Kriti Gupta and Justin Biemann note that gold has surged more than 170% over five years, largely driven by geopolitical instability, inflation fears, currency debasement worries, and investor demand for safe-haven assets. They highlight two potential threats to further gains: a slowdown or reversal in central bank purchases, and the possibility that retail investors reduce exposure after periods of volatility.
Despite these risks, the authors contend that structural demand remains strong. Emerging markets still hold a relatively small share of reserves in gold, leaving room for further buying, particularly from China. They emphasise that major institutions such as the Federal Reserve show no indication of selling, while surveys from the World Gold Council suggest central banks broadly expect gold holdings to rise. Retail participation, though elevated, remains below historical extremes and is unlikely to dictate long-term pricing. Natasha Kaneva reinforces the bullish outlook, citing continued diversification, a weaker dollar, lower interest rates, and persistent economic and geopolitical uncertainty as supportive factors, with forecasts projecting sustained central bank demand into 2026. Source
Warwick Smith, CEO of American Pacific Mining, characterises the recent downturn in precious metals as a healthy reset rather than the end of the broader bull market. Despite sharp volatility and shaken investor confidence following gold’s rapid surge toward $5,000 per ounce, Smith argues that the fundamental drivers remain intact. He points to gold’s enduring role as a safe-haven asset amid global fragmentation, protectionism, and geopolitical tensions, stressing that the selloff reflected overextension and positioning rather than any meaningful shift in supply or demand dynamics.
Smith emphasises that copper continues to present the most compelling long-term opportunity, citing structural shortages driven by electrification, defence spending, and grid expansion. With permitting timelines stretching decades, declining ore grades, and a lack of major discoveries, he sees persistent deficits supporting higher prices. While acknowledging the psychological toll of market swings, Smith advises long-term investors to remain selective, focus on financially strong companies, and take advantage of corrections. He notes that major producers maintain strong balance sheets and cash flow, suggesting that sector strength could eventually benefit developers and explorers as the metals cycle progresses. Source
Dominic Schnider of UBS Wealth Management argues that despite heightened volatility at the end of January, major commodities including precious metals, oil, and industrial metals ended the month with gains. He attributes gold’s strength to persistent political, geopolitical, and economic uncertainty, which continued to drive safe-haven demand. As market turbulence subsides, Schnider sees supportive conditions returning, forecasting that gold could climb to USD 6,200 per ounce by mid-year, backed by central bank and investor demand, large fiscal deficits, lower real U.S. interest rates, and ongoing geopolitical risks.
Beyond gold, Schnider highlights structural supply shortages in copper and aluminium, suggesting these constraints should support prices over the medium term while long-term demand benefits from themes such as global electrification. He recommends that investors maintain commodity exposure for diversification, noting that modest gold allocations can buffer against systemic risks, while those heavily concentrated in gold may benefit from expanding into other commodities, including industrial metals and agricultural assets. Schnider emphasises that commodities are likely to play a larger portfolio role in 2026 as supply-demand imbalances and macroeconomic uncertainties persist, with UBS maintaining a constructive outlook on gold’s trajectory. Source
Volatility is expected to dominate the precious metals market in 2026, with HSBC analyst James Steel arguing that traditional relationships between gold and real interest rates have weakened. He notes that gold no longer reacts as predictably to movements in US Treasury yields as it did historically, particularly since shifts that began in 2022. Increased retail participation, persistent geopolitical risks, and unusually strong central bank buying have reshaped market dynamics, reducing gold’s sensitivity to real rates.
Steel also emphasises the importance of central bank independence, suggesting that any perceived threat to the Federal Reserve would likely support gold prices. While dismissing the idea of widespread currency debasement, he points to reserve diversification as a key driver of demand, with central banks reducing dollar exposure through gold purchases at rates far above previous averages. Despite gold not surging alongside recent yield declines or equity market shifts, he maintains that the broader bull market remains intact, arguing that sharp rallies naturally invite heightened price swings and that safe-haven status does not eliminate volatility. Source
Commodity analysts at ANZ have raised their gold price target, forecasting that the metal will climb to $5,800 an ounce in the second quarter, up from their earlier $5,400 projection. Despite recent volatility and a pullback from record highs near $5,600, the bank argues that the rally remains structurally intact rather than nearing a cyclical peak. Expectations that the Federal Reserve will cut interest rates at least twice this year are seen as a major support, with easing inflation pressures keeping real rates on a downward path. Persistent geopolitical and economic uncertainties, including trade tensions linked to Donald Trump’s tariff stance, are also expected to sustain investor demand for defensive assets.
ANZ characterises gold as a critical diversification tool amid what it describes as a broader structural shift in global financial markets. Concerns over rising sovereign debt levels and waning confidence in long-dated government bonds, particularly US Treasuries and other major bond markets, are reinforcing gold’s appeal as a store of value. While central bank purchases are expected to remain robust through 2026, the bank anticipates that investment flows will be the primary driver this year, highlighting significant room for increased allocations to gold-backed exchange-traded funds. Even modest portfolio rotations from equities and bonds into gold could have an outsized impact on prices, while silver is expected to benefit from gold’s strength but exhibit wider price swings and reduced outperformance potential. Source
The US dollar strengthened after minutes from the Federal Reserve indicated that policymakers are not in a hurry to cut interest rates, with some open to future hikes if inflation remains persistent. Higher US yields supported the dollar’s gains against the euro and yen, while the euro stayed below $1.18. Commodity-linked currencies such as the Australian and New Zealand dollars faced pressure, with the kiwi dropping nearly 1.4% after the Reserve Bank of New Zealand signalled a cautious approach to future rate adjustments. Market focus is on upcoming economic data including global purchasing managers’ indices and US GDP figures, which could influence the trajectory of rates and currency flows.
The yen also weakened against the stronger dollar as the Trump administration rolled out the first US investments under Japan’s $550 billion pledge, while Japanese domestic factors such as low interest rates and budget concerns continue to weigh. The dollar/yen pairing faces uncertainty depending on whether Japanese investment inflows support the dollar or if FX reserves are used to stabilise the yen. Other Asian currencies were largely stable, with holidays in Hong Kong, China and Taiwan reducing trading activity, leaving the yuan steady at 6.89 to the dollar. Source
Recent data presents a mixed picture of the US labor market, with nonfarm payrolls rising by 130,000 in January, well above economists’ expectations, and private-sector employment adding 172,000 jobs. At first glance, this suggests a solid start to the year and could support continued gains in equities, as investors anticipate accommodative monetary policy from the Federal Reserve. Average hourly earnings rose 0.4% for the month, while headline and core inflation remain near 2.4% and 2.5% annually, respectively, indicating that inflation is still above the Fed’s 2% target. Market sentiment reflects optimism that potential Fed rate cuts this year could sustain the S&P 500, particularly under a new chair who may favour more supportive policy.
However, underlying trends suggest stagnation rather than robust growth, as the US created only 181,000 jobs over the past year, and 2025 employment gains were revised downward by over a million, marking the largest annual adjustment in decades. Inflation risks remain, with companies having absorbed the bulk of past tariff costs and the AI-driven surge in memory chip prices potentially pushing up costs in technology, automotive, and consumer sectors. While current conditions seem positive, the labor market’s apparent success could quickly reverse, leaving monetary policy and market expectations highly sensitive to shifts in employment and price pressures. Source
Disclaimer: These articles are provided for informational purposes only. They are not offered or intended to be used as legal, tax, investment, financial, or any other advice.
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