Gold and silver prices experienced significant volatility this week, driven by anticipation of key US economic data releases and uncertainty surrounding Federal Reserve monetary policy. Precious metals retreated from late-January highs as investors engaged in profit-taking ahead of reports on retail sales, nonfarm payrolls, and inflation.
On Tuesday, gold and silver both declined ahead of the upcoming data, with COMEX gold trading near $5,100 per ounce and silver falling 1.4% to $81.118 an ounce. The market's focus remained on the potential implications of the economic indicators for future interest rate decisions by the Federal Reserve.
The narrative shifted on Wednesday as weaker-than-expected US retail sales data—which showed flat growth in December versus an expected 0.4% increase—triggered a drop in US Treasury yields. This supported a rebound in precious metals, with COMEX gold rising 1% to $5,081.96 and silver gaining 2.3% to $82.205 an ounce. Lower yields reduce the opportunity cost of holding non-yielding assets like gold.
Federal Reserve independence concerns added another layer of uncertainty. US President Donald Trump recently suggested he might sue his new Fed chair nominee, Kevin Warsh, if Warsh did not agree to lower interest rates. This was compounded by remarks from Fed Governor Stephan Miran, who stated that complete central bank independence is unattainable. Despite hawkish comments from regional Fed Presidents, the US dollar remained under pressure, providing further tailwinds for gold.
Analysts from UBS revised their gold price forecast upward, now predicting the metal could close the year at approximately $5,900 an ounce. They cited expectations of declining real US rates, robust central bank demand, and geopolitical risks as key supportive factors. However, they noted that for immediate upside momentum, gold prices need to convincingly break above the $5,090 per ounce level.
The broader commodity market also saw movement. Oil prices gained slightly due to fears of supply disruptions in the Strait of Hormuz amid ongoing US-Iran tensions. Meanwhile, base metals like copper and aluminum fell, pressured by a stronger US dollar and diminished Chinese demand ahead of a major holiday period, alongside concerns about new EU carbon border taxes affecting industrial exports.
