Gold markets came under heavy selling pressure at the start of the week, extending the sharp decline seen in the previous session, as investors moved to lock in profits after recent record highs. This shift coincided with markets reassessing the implications of the upcoming leadership change at the U.S. Federal Reserve.
Spot gold fell by around 5%, sliding toward the $4,586 per ounce level, while April futures retreated to near $4,703. This move followed Friday’s aggressive sell off, during which gold erased nearly 10% of its value after retreating sharply from last week’s record peak close to $5,600 per ounce signaling a clear transition into a corrective phase after pronounced overbought conditions.
Selling pressure was not limited to gold alone. Losses spread across the broader precious metals complex, with silver plunging more than 7% and platinum declining by roughly 4%. This price action points to broad based capital outflows from the sector, rather than a narrow or purely technical pullback.
The primary catalyst behind the shift in sentiment was U.S. President Donald Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Federal Reserve Chair when his term ends in May. The announcement removed a key layer of uncertainty that had been supporting gold’s safe haven appeal, opening the door to widespread profit-taking at elevated price levels.
At the same time, markets expressed concern over Warsh’s policy stance, as he is widely viewed as one of the more inflation-focused candidates. This perception reduces expectations for aggressive monetary easing over the medium term. While Warsh has previously aligned with calls for lower interest rates, his resistance to large-scale quantitative easing has reinforced expectations of a less supportive monetary backdrop for gold.
The pressure was compounded by a rebound in the U.S. dollar from four year lows, further weighing on dollar denominated metals and prompting investors to rebalance positions away from gold in the short term. Despite the sharp pullback, gold still closed January with gains of nearly 15%, driven by elevated geopolitical risks that boosted demand for safe haven assets earlier in the month.
However, that support has begun to fade amid growing reports of potential U.S. Iran negotiations, easing some of the geopolitical tensions that had been a key driver of gold’s rally. Media reports indicated efforts to arrange indirect talks, while President Trump confirmed that discussions over Iran’s nuclear program were “serious.”
Looking ahead, market focus is shifting toward upcoming U.S. economic data most notably the nonfarm payrolls report which will play a critical role in shaping interest-rate expectations. Until greater clarity emerges, gold is likely to remain volatile, with corrective movements favored unless new catalysts reignite upside momentum.
Despite near term pressure, JP Morgan maintains a constructive medium term outlook for gold, citing sustained demand from central banks and investors. The bank believes this structural trend in reserve diversification could push prices toward $6,300 per ounce by year end.
In its research note, JP Morgan emphasized that gold’s appeal remains intact in an environment where real assets continue to outperform paper assets. The bank also raised its forecast for central bank gold purchases to 800 tons in 2026, underscoring that diversification efforts remain active and far from exhausted.
By contrast, the bank adopted a more cautious stance on silver. Although prices have hovered near $80 per ounce since late December, JP Morgan sees less clarity around the drivers of silver’s rally compared with gold. Silver dropped more than 6% on Monday to around $78.9 after hitting a record high of $121.6 just days earlier.
Unlike gold, silver lacks consistent structural buying from central banks during pullbacks, increasing the risk of a renewed rise in the gold to silver ratio in the coming weeks. Still, JP Morgan expects silver to maintain a relatively higher average floor in the $75–$80 range for now, arguing that the metal is unlikely to surrender its gains entirely despite the ongoing correction.
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