Markets opened the week in shock as gold underwent a historic technical reset, forcing traders to abandon the parabolic narrative after a brutal liquidation erased weeks of gains in a single session.
What had seemed an unstoppable advance towards the $6,000 level unravelled on Friday, now being dubbed “Black Friday” for precious metals, after the nomination of Kevin Warsh as the next Federal Reserve Chair caught markets off guard. Positioning had been heavily skewed towards a weaker US dollar and a more accommodative central bank.
Instead, the prospect of a more hawkish Federal Reserve triggered a sharp rebound in the greenback from multi-year lows, unleashing a wave of margin calls that sent gold tumbling from its record high of $5,998 to below the $5,000 mark.
Fed Re-Rating and the Bursting of the Gold Bubble
The policy signal did more than rattle currency pairs; it shattered the momentum trade in hard assets. For much of January, gold had been treated as the ultimate hedge against Fed “debasement” and the escalation of trade tensions.
However, with Warsh seen as a staunch defender of the dollar and an advocate of a leaner balance sheet, the easy money floor that had underpinned gold’s 29% rally in January has suddenly disappeared.
The sell-off has been compounded by technical washouts and speculative exhaustion. Traders who had been comfortably leaning into the triple-top breakout are now reassessing the opportunity cost of holding non-yielding bullion, as US 10-year yields remain firm near 4.24%.
Key Symbols to Watch
XAUUSD | USDX | XAGUSD | SP500 | BTCUSD
Upcoming Events
| Date | Currency | Event | Forecast | Previous | Analyst Remarks |
| 2 Feb | USD | ISM Manufacturing PMI | 48.5 | 47.9 | Manufacturing contraction continues; tariff uncertainty weighs |
| 4 Feb | USD | ADP Non-Farm Employment Change | 48K | 41K | Private hiring slowdown could pause dollar rally |
| 6 Feb | USD | Average Hourly Earnings m/m | 0.30% | 0.30% | High wages would favour Warsh’s hawkish side |
| 6 Feb | USD | Non-Farm Employment Change | 67K | 50K | A strong beat could seal Gold’s fate below $5,000 |
| 6 Feb | USD | Unemployment Rate | 4.40% | 4.40% | Rising rate could reinforce a softer Fed tone |
For full view of upcoming economic events, check out VT Markets’ Economic Calendar.
Key Movements of the Week
Gold (XAUUSD)
- XAUUSD retraces at key support level 4550
- If bearish momentum extends, it could slide towards 4400 level
- Risk-off sentiment could push prices lower
Silver (XAGUSD)
- XAGUSD retraces at key support level 74
- Silver could start consolidating between 86.8 resistance level and 74 support level
- Upcoming NFP data is crucial for Silver’s movements
U.S. Dollar Index (USDX)
- USDX has found support at the 95.35 level
- USDX is currently testing an important resistance level priced at 97
- If USDX manages to break past current resistance level, it could seek higher prices
Bitcoin (BTC)
- Bitcoin extends its bearish momentum towards $75,000 support level
- If current support level breaks, it is likely to seek for $70,000 support level
Ethereum (ETH)
- Ethereum is forming lower lows and lower highs indicating a bearish trend
- Ethereum is testing current support level priced at 2200
- If current support level doesn’t hold, it could slide lower to 2000
Bottom Line
Gold’s constructive outlook continues to be supported by expectations that the Federal Reserve will implement further interest rate cuts in the coming months. The appointment of former Fed Chair Kevin Warsh by US President Donald Trump to succeed Jerome Powell in May has reinforced this sentiment.
That said, a more dovish Fed chair does not guarantee aggressive rate reductions. Nevertheless, the change in leadership could steer market expectations towards lower rates over time, a scenario likely to weigh on the US Dollar while maintaining a supportive backdrop for gold.
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