Gold Tailspins Amid Profit-taking, Fed Chair Announcement, PPI Release
Front Month Comex Gold for February delivery nosedived by $604.50 (or 11.37%) to $4,713.90 per troy ounce. However, gold prices skyrocketed by $388.30 per troy ounce (8.98%) for this month and have increased for six consecutive months.
Front Month Comex Silver for February delivery also were in freefall by $35.747 (or 31.35%) to $78.290 per troy ounce. However, silver prices also skyrocketed by $8.1560 (or 11.63%) per troy ounce for this month, increasing for the ninth consecutive month.
In January, gold and silver prices soared by around 17% and 39% respectively.
Yesterday, Front Month Comex Gold for February delivery hit a new record closing high at $5,318.40 per troy ounce after eight consecutive sessions of gains. As a result, investors today opted to book profits.
The U.S. Fed held interest rates steady at the conclusion of its two-day meeting on January 28. The Fed’s economic outlook has diminished expectations of any near-term rate cuts. The Fed had instituted rate cuts thrice consecutively in late 2025.
U.S. President Donald Trump has been criticizing current Fed Chair Jerome Powell for keeping rates too high.
With Powell’s tenure coming to an end by mid-2026, Trump announced his intent to nominate Kevin Warsh, who served as a Fed governor from 2006 until 2011, as Powell’s successor. Warsh’s appointment requires Senate confirmation.
Economists are a bit “surprised” with Trump’s pick, as Warsh is a “hawkish leaning” banker, supporting higher interest rates in an inflationary environment.
The U.S. dollar index was last seen trading at 97.00, up by 0.72 (or 0.75%) today.
The Bureau of Labor Statistics data revealed that month-on-month producer prices rose 0.5% in December 2025, the largest gain in three months, accelerating from a 0.2% increase in November.
Year-over-year, producer prices rose 3.0% in December, unchanged from the previous month.
The month-on-month core producer prices (excluding food and energy) jumped by 0.7% from the previous month in December and on an year-over-year basis, core prices rose by 3.3%.
A funding bill passed by Congress last year to run the U.S. government is lapsing by midnight tonight.
After hectic parleys between Senate Democrats and Republicans and the White House, a deal has been reportedly struck to pass five bills to finance a large portion of the government spending except the Department of Homeland Security.
Recently, immigration officials fatally shot two U.S. citizens in Minneapolis, triggering public anger.
Reflecting on this, a few Democrats threatened to halt any funding that would include bankrolling the DHS, which was a sticking point in the negotiations.
Though today’s bill strips DHS funding, it has to pass back to the House from the Senate. The House is in recess, with a vote not likely to happen until Monday.
Hence, the likelihood of a partial shutdown at least for a brief period appears inevitable.
Despite Trump’s ultimatum to Iran to negotiate on a nuclear deal before time runs out or face severe attacks, Iran has refused to bow to U.S. pressure.
Yesterday, Iran’s army announced adding 1,000 new “strategic” drones.
With Iran’s neighbors pushing for diplomacy, tension still persists in the Middle East. Turkey has come forward to mediate a solution.
In Europe, Russia has consented to pause strikes on Ukraine until February 1 owing to Trump’s appeal.
Trump made the request to support Ukrainians who are facing a “harsh winter” with heating equipment made inactive after Russian strikes on energy installations.
Russia is yet to take positive steps on the U.S.-authored peace proposal though Ukraine’s President Volodymyr Zelenskyy is prepared to expedite the deal.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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