Gold prices opened the week with strong bullish momentum, decisively breaking through the key psychological threshold of $5,000 per ounce. The precious metal's rally was driven by a confluence of macroeconomic and geopolitical factors.
A softer US dollar provided significant tailwinds, with the greenback coming under pressure ahead of major US macroeconomic data releases scheduled for the week. Investors are keenly focused on the January jobs report, consumer price figures, and initial jobless claims for further insight into the Federal Reserve's future monetary policy direction. Market expectations already factor in at least two 25-basis-point interest rate cuts during 2026.
Political developments in Japan also lent support. The landslide victory of Prime Minister Sanae Takaichi has strengthened expectations of substantial fiscal stimulus under the "Sanaenomics" agenda, which typically weighs on the yen and supports gold prices.
Sustained central bank buying continues to underpin the market. Reports indicate that the People's Bank of China added to its gold reserves in January, marking the fifteenth consecutive month of purchases. The central bank demonstrated its commitment by adding 0.04 million troy ounces to its holdings.
From a technical perspective, the market showed signs of aggressive buying interest during the formation of a recent low, potentially pointing to activity from large market participants. Following a spike in extreme volatility around the turn of the month, the market is now attempting to establish a new equilibrium, with supply and demand potentially settling into a temporary balance around the $5,000 area.
At the time of writing, gold prices on COMEX last traded at $5,080.65 per ounce, up 2.0%. Silver prices also surged more than 6% to trade around $82 per ounce, gaining interest from reflation trades driven by the same political and monetary factors.
