International spot gold prices oscillated higher last week (the week of January 12-16), gaining $85.67 or 1.9%, marking the second consecutive week of gains.
Analysis suggests that rising uncertainties surrounding the Federal Reserve's independence, tariff directions, and the Middle East situation, coupled with intertwined geopolitical tensions and US domestic political turmoil, propelled gold and silver to break upwards, once again refreshing their historical highs.
Looking ahead to the new week, market attention remains highly focused on former President Trump's statements regarding tariffs and geopolitical situations in places like Greenland. Furthermore, with the US PCE data imminent, the direction of the Federal Reserve's monetary policy continues to be a focal point for the precious metals market.
Geopolitical tensions and US domestic turmoil have clearly benefited the precious metals market. Early in the week, gold prices reached a new historical high of $4,642.85 per ounce; silver performed even more impressively, hitting a weekly high of $93.70 per ounce, with its year-to-date cumulative increase reaching nearly 30%.
Dramatically, the supportive dynamics from the geopolitical situation shifted abruptly in the latter half of the week. Following Trump's statement to "wait and see" regarding the Iran situation, geopolitical tensions noticeably cooled, leading to a decline in market safe-haven demand and subsequent profit-taking in the gold and silver markets.
Signals regarding the Federal Reserve's interest rate cut prospects last week, however, were somewhat mixed.
On one hand, economic data showed that the US Consumer Price Index (CPI) for December 2025 rose 2.7% year-on-year, unchanged from November; the core CPI, excluding food and energy, increased 2.6% year-on-year, also flat compared to the previous reading, but both indicators fell below market expectations. Notably, the core CPI's year-on-year growth rate hit its lowest since March 2021, reinforcing market bets on the Fed cutting rates sooner, with the probability of a rate cut in April 2026 rising to approximately 42%.
On the other hand, several Fed officials spoke out frequently, with their stances primarily focusing on two points: inflation has not yet retreated sustainably, and the risks of cutting rates too early remain high; amidst rising political pressure, the Fed must maintain its independence and adhere to a data-dependent approach. This poured cold water on market expectations for imminent Fed rate cuts. Additionally, an unexpected drop in weekly initial jobless claims last Thursday strengthened expectations that the Fed would hold rates steady for several months.
Regarding personnel developments at the Fed, due to Trump's hesitation in nominating Kevin Hassett for Fed Chair, the probability of former Fed Governor Kevin Warsh being nominated instantly surged from around 50% to 59%. Compared to Hassett, who is seen as an "extreme dove" and closely aligned with Trump, Warsh is viewed by Wall Street as having a distinctly hawkish inclination.
Influenced by the Fed leadership turmoil, traders are rapidly scaling back their bets on the number of rate cuts in 2026. Money markets have now fully priced in a 25-basis-point rate cut for July, while the probability of a cut in April stands at only 37%.
Overall, June is still seen as the most likely timing for the Fed's first rate cut in 2026.
Following the surge and subsequent retreat in precious metals last week, market views on the short-to-medium-term outlook for precious metals have diverged.
The latest Kitco News "Weekly Gold Survey" shows a clear divergence among institutional investors regarding the short-term gold outlook, although the bullish inclination among retail investors has strengthened further.
High-frequency data shows that as of the week ending January 16, open interest for gold on the Chicago Mercantile Exchange (CME) increased by 24,726 contracts, marking the second consecutive week of increase.
Data from the US Commodity Futures Trading Commission (CFTC) indicates that in the week to January 13, COMEX gold speculators increased their net long positions by 12,292 contracts to 136,548 contracts; COMEX silver speculators reduced their net long positions by 2,613 contracts to 15,045 contracts.
Regarding ETFs, the holdings report for the world's largest gold ETF, the SPDR Gold Trust, shows that in the week ending January 16, the ETF's holdings increased by 21.11 tonnes to 1,085.67 tonnes.
Technically, gold faces short-term resistance in the $4,620-$4,650 per ounce zone; a breakout could target the $4,680-$4,720 area, with a medium-term aim towards the $5,000 per ounce level. Short-term support lies in the $4,585-$4,570 zone, with key support at $4,550-$4,530. A break below this could test the $4,500 psychological level.
Domestic gold prices face short-term resistance in the 1,035-1,040 yuan per gram zone, with key resistance at 1,055-1,063 yuan per gram, and a medium-term target pointing to the 1,100-1,200 yuan per gram area. Support is located in the 1,020-1,010 yuan per gram zone, with key support at 1,005-990 yuan per gram.
International silver faces short-term resistance at $92-$94 per ounce, with key resistance at $95-$102 per ounce. Support lies in the $87-$85 per ounce area, with key support at $84-$80 per ounce.
Domestic silver faces resistance at 23,200-23,750 yuan per kilogram, with key resistance in the 24,500-25,500 yuan per kilogram area. Support is seen around 21,500-21,100 yuan per kilogram, with key support located at 20,800-19,800 yuan per kilogram.
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