Precious Metals Navigate Volatile Week to End Near Starting Point

Precious metals markets weathered significant turbulence this week, ultimately closing near their Monday opening levels after a dramatic mid-week flash crash tested key support levels. The volatile trading pattern underscored ongoing tensions between dovish monetary policy expectations and technical selling pressure from systematic strategies.

Gold opened the week with conviction Monday, surging $100 (2%) to $5,063 and decisively breaking above the psychologically important $5,000 threshold. Silver demonstrated even stronger momentum, rising $5.60 (7.19%) to $83.50 after clearing $80 resistance. The rally was primarily driven by pronounced dollar weakness, with the US Dollar Index declining 0.84% to 96.91—within one point of four-month lows. Market participants positioned for at least two 25-basis-point Federal Reserve rate cuts in 2026 ahead of critical employment and inflation data releases.

Tuesday brought profit-taking as gold retreated $34 to $5,023, though softer economic indicators continued to reinforce accommodation expectations. The session featured a series of disappointing releases: stagnant retail sales, a declining GDP control group, job openings at 2020 lows, and private payroll growth that missed forecasts. Silver declined 3% to $80.58, ending its two-session advance while remaining approximately 30% below its late-January peak. Despite the pullback, structural demand remained robust with the People's Bank of China extending its gold purchasing streak to fifteen consecutive months.

Wednesday's session defied expectations as gold futures surged $67.80 to $5,071.60 (1.35%) despite stronger-than-anticipated employment data. The Labor Department reported 130,000 jobs added in January—nearly double the 66,000-70,000-consensus forecast—while the unemployment rate edged lower to 4.3% from 4.4%. The robust data effectively eliminated prospects for March and June rate cuts, though market pricing continued to reflect expectations for reductions in July and December. The settlement marked gold's fifth-highest close in history, bringing year-to-date gains to $746 (17.25%). Notably, gold successfully converted the $5,000 level from resistance into support—a technically significant achievement.

The week's narrative shifted dramatically Thursday morning as precious metals plunged in a broad-based selloff that analysts attributed to forced liquidation rather than fundamental factors. Gold tumbled $163 (3.21%) to $4,921, while silver dropped $9.00 (10.73%) to $75.22. The 30-minute decline between 11:00 and 11:30 a.m. EST marked the most severe intraday move since January 29's historic liquidation event.

The selloff originated in artificial intelligence equities, with Nvidia and Alphabet exhibiting weakness as early as 9:00 a.m. EST. By 10:30 a.m., contagion had spread to broader equity indices, with the Nasdaq falling 2% and the S&P 500 declining 1.57% by 11:00 a.m. The selling pressure then cascaded into commodities markets. Bloomberg MLIV Macro Strategist Michael Ball characterized the move as "systematic strategy selling—the kind of momentum-driven de-risking you often see from the CTA community when levels give way."

Friday's session brought relief as January CPI data showed annual inflation of 2.4%, below the 2.5% consensus estimate. The cooler-than-expected reading sparked speculation about a potential third rate cut in 2026, providing support for non-yielding assets. Gold recovered above the critical $5,000 level, trading at $5,053 as of 4:42 p.m. ET—up $105 (2.11%) on the day and 1.36% for the week. Silver advanced $1.54 (2.06%) to $77.25, though it posted its third consecutive weekly decline.

The week's price action highlighted precious metals' vulnerability to cross-asset correlation effects and demonstrated how rapidly systematic selling strategies can cascade across markets when technical levels fail. Despite Thursday's sharp reversal, gold's ability to recover and maintain support above $5,000 suggests the longer-term bullish structure remains intact, though traders will be closely monitoring whether momentum can be sustained given the technical disruption.

Wishing you as always good trading,