Precious Metals Week in Review

1.               Wall Street is on alert for further turbulence this week, after the major indexes ended Friday in the red as investors digested a tech sell-off, wild trading in silver and gold, and the long-awaited news that Kevin Warsh will be the next chair of the Federal Reserve. With another batch of Big Tech earnings ahead, concerns about the AI trade are creeping in amid signs that Nvidia's planned investment in Open-AI may fall short of what it pledged. On Friday, the tech-focused Nasdaq Composite led the way down with a loss of roughly 1% after a steep tech sell-off on Thursday. The index ended the week down about 0.2%. Meanwhile, the S&P 500 lost around 0.4% on Friday but still finished the week up a cumulative 0.3%, and the Dow Jones Industrial Average shed 0.4% in the week's final session, logging a weekly decline of around the same magnitude. In the week ahead, investors' attention will be focused on Friday's jobs report. Economists expect the U.S. economy added 65,000 jobs last month, with the unemployment rate set to hold at 4.4%.

2.               After their biggest collapse in recent history, gold and silver are finding their way back into the light, posting their biggest one-day gains on record. On Tuesday spot gold last traded at $4,916 an ounce, up more than 5% on the day; meanwhile, spot silver last traded at $87.82 an ounce, up 11%. Some analysts note that the recovery in the precious metals confirms a growing consensus that the recent selling pressure is related to short-term speculative positioning and momentum rather than a fundamental shift in the marketplace. Michael Hsueh, Head of Metals Research at Deutsche Bank, said that although precious metals investors should be cautious as market volatility remains high, the investment case for gold remains unchanged. "Gold's thematic drivers remain positive and we believe investors' rationale for gold allocations will not have changed. The conditions do not appear primed for a sustained reversal in gold prices, and we draw some contrasts between today's circumstance and the context for gold's weakness in the 1980s and 2013,” Hsueh said in his report. The factors supporting gold prices since last year remain firmly in place: trade and geopolitical uncertainty persist. Appetite for the U.S. dollar, other major currencies, and sovereign bonds remains fragile, and that should continue to underpin the bullish case for hard commodities.

3.               Bitcoin resumed its slide lower as speculative traders returned their focus to surging precious metals, after a brief rebound from a 10-month low. The original cryptocurrency fell amid a resumption of the bearish sentiment that nearly pushed it to the lowest level since just over a year ago. The crypto derivatives market is pointing to further slump with no significant positive catalysts in sight. The open interest, the number of outstanding contracts, for crypto futures contracts, has collapsed over the weekend, according to data from CME and Coinglass. The funding rate for perpetual futures, which makes up most of the trading volume in digital assets, has turned negative, meaning there is more demand for bearish bets. Bitcoin fell 2% on Wednesday after Treasury Secretary Scott Bessent suggested the U.S. government would not bail out the cryptocurrency. The decline was also fuelled by the broader selling pressure in markets and a warning from notable investor Michael Burry that a sustained decline in bitcoin's price could "set in motion a death spiral leading to massive value destruction." "Bitcoin has been exposed as a purely speculative asset and is not near the debasement trade hedge that gold and other precious metals are," The move lower only added to bitcoin's recent rout. The world's largest cryptocurrency is down 13% over the past five days.

4.               The January jobs report, scheduled for release on Friday, is set to be delayed by the partial government shutdown, the Labour Department said. The monthly payroll growth and unemployment rate announcement is closely watched by economists and the market alike, especially with the job market locked in a standstill and Federal Reserve officials spotting signs of fragility. January jobs data was initially scheduled for release Feb. 6 at 8:30 a.m. ET. December's Job Openings and Labour Turnover Survey, set for release Tuesday morning, will also not be published as scheduled.

5.               Consumer sentiment came in better than expected in February, reaching the highest level since August, but remains down about 20% from last year's highs. The Index of Consumer Sentiment for February came in at 57.3, up 1.6 points from January but down 11.4% from last year's level of 64.7. This rise beat forecasts, with data showing economists expected this report to come in lower than January at 55.

6.               The number of Americans filing new applications for unemployment benefits increased more than expected last week, likely boosted by snowstorms across much of the country, but labour market conditions remain stable. Initial claims for state unemployment benefits jumped 22,000 to a seasonally adjusted 231,000 for the week ended January 31. Economists polled had forecast 212,000 claims for the latest week.

7.               Oil fell for the first time in three days after Iran confirmed it would hold negotiations with the U.S., easing the immediate risk of military strikes against the OPEC producer. Brent dropped near $68 a barrel, after adding 4.8% over the previous two sessions, while West Texas Intermediate was below $64 a barrel. Iranian Foreign Minister Abbas Araghchi confirmed in a social media post that the negotiations will be held in Oman on Friday, clarifying the location of the encounter.

8.               EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash U.S. Consumer Sentiment improves to 57.3 in February.

9.               USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the U.S. Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. Japan’s political backdrop is reinforcing downward pressure on the yen as USD/JPY drifts back toward 160 after its brief correction to 152.

U.S. stocks jumped on Friday, set to rebound from a week-long tech bruising as Wall Street reassessed worries about the impact of AI disruption and the risks of hefty Big Tech spending. The Dow Jones Industrial Average led the way higher, surging over 1.5%, or more than 700 points. The S&P 500 rose 1%, while the Nasdaq Composite added roughly 0.9%, as the indexes began retracing sharp closing losses. Wall Street is looking to end the week with a bounce back, as Big Tech CEOs and analysts brush aside concerns about the impact of new AI tools on legacy tech. But the S&P 500 and Nasdaq are still set for weekly losses, having slipped into negative territory for 2026. The tentative risk-on tone extended beyond stocks, as bitcoin climbed steadily back, after touching a 16-month low overnight. But the biggest cryptocurrency is still on track for its worst weekly performance since 2022 after wiping out all of its post-Trump election gains this week.

Mortgage rates held steady this week, with only a slight increase. The 10-year Treasury, a pricing indicator for 30-year fixed mortgage rates, has hovered above 4.2% since mid-January. However, the spread between Treasury's and mortgage rates has narrowed recently, and the 30-year has resisted a substantial move higher. According to Freddie Mac, the average 30-year fixed rate this week was 6.11%, up from 6.10%. The 52-week low is 6.06%. Meanwhile, the 15-year fixed averaged 5.50%, up from 5.49%.

Layoff announcements ballooned in January, hitting the highest level for the month since 2009, according to a Thursday report. That should come as no surprise, given tens of thousands of job-cut announcements in recent weeks from the likes of Amazon, UPS, and Pinterest, as companies claim the need to make room for investments in artificial intelligence, reorient business plans in uncertain times, reduce bureaucracy, or compensate for the rash of pandemic-era hiring. "Generally, we see a high number of job cuts in the first quarter, but this is a high total for January," Andy Challenger, chief revenue officer for Challenger, Gray & Christmas, said in a statement. "It means most of these plans were set at the end of 2025, signalling employers are less-than-optimistic about the outlook for 2026."

Volatility should be expected to remain high as investors will be closely watching for hints on the upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hope that they will be able to withstand corrections in multiple market sectors. Many of these investors have included physical precious metals as part of their diversification plans, given their long history as a hedge against both inflation and during times of economic turmoil. Remember, the key to profitability through the ownership of physical precious metals is to own the physical product and hold it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.

Trading Department – GCILBullion.

This is not a solicitation to purchase or sell.