Gold slips on stronger dollar; silver rebounds after sharp fall

Gold prices fell on Monday (February2) as a firmer US dollar weighed on investor sentiment, while silver recovered from a more than three-week low hit last week.

Spot gold dropped 1.5% to $4,793.97 per ounce in early Asian trade, after touching a more than one-week low on Friday (January 30). Despite the decline, bullion remains well below the record high of $5,594.82 an ounce reached last Thursday (January 29). Meanwhile, US gold futures for February delivery rose 1.6% to $4,818.10 per ounce.

Silver moved in the opposite direction, gaining 1.6% to $85.98 per ounce, rebounding after its recent slide. The metal had earlier surged to a record $121.64 an ounce last week before retreating sharply.

Market participants focused on developments around US monetary policy, particularly US President Donald Trump’s nomination of Kevin Warsh as Federal Reserve chair. Investors are assessing how his leadership might shape interest rate policy and the Fed’s balance sheet strategy.

The dollar held onto recent gains as traders weighed expectations of a potentially tighter monetary stance under Warsh, whose preference for a smaller Fed balance sheet is well known.

A stronger dollar typically makes gold more expensive for buyers using other currencies, reducing demand.

Economic data added to the debate. US producer prices rose in December at their fastest pace in five months, partly reflecting the impact of import tariffs. The data suggests inflationary pressures could persist, giving the Fed room to keep rates steady in the near term.

Even so, markets continue to price in at least two rate cuts in 2026. Lower interest rates generally benefit gold, which does not offer yields like bonds.

Outlook: Mixed signals

Analysts remain divided on the near-term direction of precious metals.

Sandip Raichura of PL Capital said that while short-term volatility is likely to persist, gold’s long-term fundamentals remain strong. He expects the metal to trend higher over the next two years, potentially reaching $6,000 per ounce and moving toward $8,000 in the medium term.

Silver, however, faces greater uncertainty. Raichura cautioned that prices have become “severely overbought,” and warned that the metal could test support near $60 per ounce globally—still above production costs but well below recent peaks.

Rajkumar Subramanian of PL Wealth advised investors to avoid lump-sum purchases in silver, citing its high annual volatility of 25–35%. Instead, he recommended staggered buying to manage risk while maintaining exposure to demand from solar, electronics, and manufacturing sectors.

Gaurav Garg of Lemonn Markets Desk described the recent pullback as a healthy consolidation rather than a reversal of trend, but noted that elevated prices have already dampened physical demand in India, which could contribute to further short-term swings.

Key data to watch this week

Investors will monitor a series of manufacturing PMI releases from Japan, China, the UK, France, Germany, the Eurozone, and the United States for further signals on global economic momentum.

-With Reuters inputs