Gold and silver retreat into their ranges as extreme volatility persists

Outside Market Developments: Concerns over overstretched tech valuations have intensified after Alphabet (Google's parent company) reported strong Q4 results but forecast $175–$185 billion in 2026 capex – roughly double last year's – to fuel AI growth. Markets are in risk-off mode, driving a rotation out of tech/AI names into value stocks.

President Donald Trump signed a major $1.2 trillion funding package on Tuesday, ending a brief partial government shutdown. The bill narrowly passed the House by a three-vote margin, 217-214. Twenty-one Republicans voted against the package, highlighting tensions within the party over compromise with Democrats on Homeland Security funding and a number of other conservative priorities.

DHS funding was stripped out of the legislation to avert another protracted government shutdown and will be debated separately during a two-week stopgap period. Democrats will demand significant reforms to immigration enforcement, while Republicans will seek to maintain or expand robust DHS/ICE capabilities without major new restrictions.

The BLS has already announced that the January jobs report, initially scheduled for release on Friday, will be delayed due to the brief partial shutdown. Median expectations for nonfarm payrolls are +68k, with a steady jobless rate at 4.4%.

The jobs data that did come out this week have been soft, stoking ongoing worries about job creation, suggesting potential downside risk to NFP, and contributing to overall risk aversion. The ADP employment report showed private sector employment increased by just 22k jobs in January, well below market expectations of +48k.

“Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024. While we've seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable,” said Dr. Nela Richardson, ADP's chief economist.

U.S. employers announced 108,435 job cuts in January, according to Challenger, Gray & Christmas, more than triple the 35,553 cuts seen in December. That's the highest print for a January since 2009.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January. It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026,” said Andy Challenger.

JOLTs job openings tumbled 386k to 6.542M in December 2025, the lowest since September 2020 and well below market expectations of 7.2M. Total separations, including quits, layoffs, discharges, and other separations, were little changed at 5.3M.

Initial jobless claims jumped to an eight-week high of 231k in the 31-Jan week, above expectations of 212k, versus 209k in the previous week. Continuing claims rose 25k to 1,844k in the week ended 24-Jan, below expectations of 1,850k, versus 1,819k in the previous period.

Rising job-market jitters have lifted Fed easing bets, although Fed funds futures continue to suggest the Fed is on pause through H1. That could change if January NFP misses expectations as well. Currently, the next 25 bps cut is not fully priced until September, and the implied Fed funds rate for year-end is 3.0875%, suggesting potential for just over 50 bps in total easing this year.

Risk aversion has pushed the dollar index to new highs for the week, although rising rate-cut expectations pose a headwind. Last week's plunge to four-year lows suggests the greenback remains vulnerable.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$96.91 (-1.95%)
5-Day Change: -$498.96 (-9.29%)
YTD Range: $4,310.83 - $5,595.02
52-Week Range: $2,835.23 - $5,595.02
Weighted Alpha: +74.38

Gold is back on the defensive today, weighed by a firmer dollar and a bull camp cautious about recommitting to the upside in light of recent volatility. In Monday's commentary, I wrote, "I'd like to see the market stabilize between $4,400 and $5,000 for some period," which would allow the trade to catch its breath and reevaluate the fundamental and technical pictures.



I see the fundamentals as still broadly supportive. Persistent geopolitical and trade uncertainties, along with the deterioration of the U.S. fiscal condition, continue to provide a tailwind for the yellow metal.

Recent four-year lows in the dollar are indicative of the macro de-dollarization trend. As part of that, central bank demand for gold remains robust, and there are indications that they have been active on this dip. We won't know to what extent until the World Gold Council reports February data in early March.

I speculated on Monday that we would likely see intensified physical buying in Asia, given that we're at the tail end of the Indian wedding season, and the Lunar New Year is just around the corner (17-Feb). Both are auspicious times to gift gold. Reports from key markets like China, Singapore, and India indicate the price drop has indeed led to strong retail enthusiasm.

Gold traded briefly above $5,000 on Wednesday, completing a more than 50% retracement of the recent plunge. However, gains faltered ahead of $5,100, leaving the 61.8% retracement level of the decline protected at $5,141.08 for the time being. Penetration of the latter is needed to significantly improve the technical picture, with $5,000 and Wednesday's high at $5,091.85 now providing intervening barriers. 

I do believe losses are corrective within the long-term downtrend, and I'm encouraged by the fact that gold held the 50-day moving average on a close basis this week and then registered subsequent closes back above the 20-day. I'm watching to see if $4,851.59 will hold on the close today.

UBS and Chase remain quite bullish into year-end, forecasting $6,200 and $6,300, respectively. Beyond last week's all-time high at $5,595.02, my next objectives were $5674.97 (Fibonacci) and $6,000 (psychological). I'll be able to generate some additional targets once I'm confident the corrective low is in.

For now, I suspect we'll see further choppy consolidation within a fairly broad range as the bulls and bears hash things out. Ultimately, that range will likely prove to be a continuation pattern (flag or pennant), culminating in an upside breakout and continuation of the bull trend. While this is my preferred scenario, silver has the potential to drag gold to new corrective lows.


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$9.727 (-11.04%)
5-Day Change: -$39.011 (-33.79%)
YTD Range: $71.429 - $121.630
52-Week Range: $28.565 - $121.630
Weighted Alpha: +153.64

Silver remains extraordinarily volatile, with another double-digit percentage move today, weighed by a stronger dollar and revived concerns about overvaluation of the tech/AI sector. The rebound seen earlier in the week was nearly fully retraced and the white metal appears poised to close below its 50-day moving average.



While Monday's low of $71.684 and the low for the year at 71.429 (02-Jan) remain intact at this point, the downside remains vulnerable. Penetration of these levels would shift focus to the $70 zone initially, but potential to the rising 100-day MA at $63.471 would have to be considered.

The gold/silver ratio has firmed to a seven-week high above 66, suggesting scope for further retracement to the 70 zone. If that's the way things unfold, it means gold could hold its current range even if silver were to drop another $10+.

A rise back above the 50-day MA at $77.825 would ease short-term pressure on the downside somewhat, but it sure seems like the wild ride in silver is going to continue.

Additional resistances are marked by an intraday level at $81.043 and the high for the day at $90.392. Wednesday's high at $92.186 provides a strong intervening barrier ahead of the important 20-day MA at $93.500, which is rotating lower. A close above the latter is needed re-instill some confidence in the longer-term bullish scenario.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

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