New York, February 1, 2026, 12:21 EST — Market closed.
- Gold enters the new week following a sharp reversal that ended its late-January rally.
- The dollar has bounced back, with shifting expectations around rate cuts grabbing the spotlight.
- Traders are focused on upcoming U.S. data and the Fed succession process for clues on the next move.
Gold prices enter Monday weighed down by Friday’s sharp selloff, as investors suddenly dumped holdings following a record rally and renewed doubts over who will lead the U.S. central bank next.
The shift is significant because bullion had been moving almost exclusively as a hedge—against geopolitical risks, debt concerns, and the dollar—until that suddenly changed. These sharp reversals usually prompt quick adjustments in positioning, particularly as a new month begins.
Spot gold plunged 9.5% on Friday, falling to $4,883.62 an ounce in New York’s late afternoon after hitting an all-time high of $5,594.82 the previous day. Meanwhile, U.S. gold futures for February closed down 11.4% at $4,745.10. Standard Chartered’s Suki Cooper attributed the drop to “the dollar” and “real yields” — inflation-adjusted bond yields — which spurred profit-taking. Nicky Shiels of MKS PAMP described January as “the most volatile month in precious metals history,” highlighting downside levels that markets could now probe. (Reuters)
The mood turned sharply as traders absorbed Trump’s choice of Kevin Warsh to replace Jerome Powell and hopes for rate cuts faded. “Both gold and silver were due for a pullback after the recent speculative frenzy,” Ole Hansen of Saxo Bank noted. Others cautioned that thin liquidity could amplify modest trades into large price swings. (Reuters)
Citi, in a note released after the recent shakeout, said gold allocations remain supported by overlapping geopolitical and economic risks. However, the bank warned that about half of the risk premium could disappear later in 2026. Citi also noted that if Warsh’s nomination is confirmed, it would bolster the Fed’s political independence — which the bank views as a medium-term negative for gold. (Reuters)
The physical market hasn’t settled down either. In India, premiums hit as high as $121 an ounce this week — the steepest since May 2014 — as buyers moved in ahead of the February 1 federal budget and potential changes to import duties, Reuters said. In China, premiums also remained elevated amid rising jewellery and investment demand ahead of Lunar New Year, even though some sellers took the chance to offload old jewellery back into the market. (Reuters)
Macro signals are mixed. The dollar strengthened and Treasury yields ticked up following a hotter-than-expected Producer Price Index reading—a key measure of inflation at the producer level. At the same time, investors mulled over the implications of Warsh’s nomination for the Fed’s rate-cut timeline. According to CME’s FedWatch tool, the market isn’t pricing in better-than-even chances of a cut before June. (Reuters)
That outlook could reverse. Should U.S. data weaken or the Fed nominee’s confirmation hit snags, rate forecasts might shift sharply. In that case, gold could attract buyers fast, particularly if geopolitical tensions rise and safe-haven demand kicks in.
Friday’s U.S. employment report is the next big trigger on the horizon. The Bureau of Labor Statistics will publish January’s jobs data on February 6 at 8:30 a.m. ET. This release has the potential to shake up the dollar, bond yields, and investors’ enthusiasm for increasing gold holdings. (Bls)
