Good morning. Let's start with a look at international markets. On the evening of the 27th, the NYMEX palladium front-month contract fell over 12%, while the NYMEX platinum front-month contract dropped more than 10%.
In the precious metals sector, New York silver futures prices tumbled nearly 7%, and the main Shanghai silver futures contract declined by 2.68%. Conversely, the spot price of London gold hit a fresh all-time high in the early hours of this morning. As of this morning's close, the spot price of London gold rose 2.7% to $5,179 per ounce, setting another record high. New York gold futures advanced 1.88%, breaking above $5,200 per ounce. Spot silver in London gained 4.73%, while New York silver futures fell 2.73%. The NYMEX palladium front-month contract dropped over 10%, and the NYMEX platinum front-month contract declined more than 8%.
Two prominent institutions have raised their future price forecasts for gold and silver. Citi Research increased its silver price target from a previous $100 per ounce to $150. In a report, Citi stated, "We expect bullish factors to remain intact in the near term, supporting robust investment and speculative demand, which could lead to further tightening of physical supply in major trading centers outside the U.S." According to the latest analysis from RBC Capital Markets, gold's upward momentum is far from peaking. The bank's previous scenario analysis projected gold reaching approximately $5,200 per ounce by the fourth quarter of 2026. However, the current environment of extreme uncertainty, coupled with broad US dollar weakness, has significantly accelerated this ascent. Historical averages suggest this rally could persist until September or even December of this year. Gold prices accumulated a gain of about 65% in 2025. If a similar rate of increase is maintained in 2026, a trend extrapolation indicates prices could reach as high as $7,100 per ounce by year-end. Separately, the CME Group issued a notice on the 27th, adjusting the margin parameters (Outright Rates) for certain silver, platinum, and palladium futures contracts. The document showed that the new margin requirements for some silver contracts are higher than previous levels, at approximately 11% of the nominal value. The new standards will take effect after the close of trading on January 28, local time. The notice did not involve gold-related contracts. Notably, on the evening of the 27th, the US dollar index plunged, falling close to a four-year low.
In the early hours of this morning, the intraday decline in the US dollar index widened to 1.0%. On the news front, former President Trump expressed that he is not worried about the dollar's decline. When asked if he would like to see the dollar weaken further, Trump said the currency could move up and down like a "yo-yo." By the close of New York forex trading, the dollar index was down 0.84% at 96.219. The dollar has weakened for four consecutive trading sessions. Some market analysis suggests this softness reflects investor caution following unpredictable US policy shifts, including former President Trump's threat to "take over Greenland." From a longer-term perspective, risks to Federal Reserve independence, the widening US government fiscal deficit, and escalating geopolitical risks are all weighing on the dollar index. The Iranian rial fell to a record low against the US dollar, reaching 1.5 million rials per dollar. On the 27th, multiple currency tracking websites showed the Iranian rial plummeting to a historic low of 1.5 million rials per US dollar. Data from the tracking site Bonbast.com indicates the rial has depreciated by about 5% this month. In related news, Iran's new central bank governor stated on Tuesday that the foreign exchange market is following its natural course. Data released by the Iranian Statistical Center last Sunday showed the household monthly inflation rate continues to climb, with the year-on-year inflation rate for the period from December 21, 2025, to January 19, 2026, reaching a high of 60%. Meanwhile, an internet blockade implemented since January 8 has not yet been fully lifted, severely impacting Iran's online economy. A government spokesperson said on Tuesday that while the government prefers free internet access, restrictions must be maintained for security reasons. Regulatory measures continue to intensify! Another 26 clients face trading and withdrawal restrictions. On January 27, the Shanghai Futures Exchange (SHFE) announced it had discovered three groups involving 18 clients suspected of failing to report actual controlling relationships in tin and silver futures trading. In accordance with relevant rules, the exchange decided to impose one-month restrictions on opening new positions and withdrawing funds for these clients in the tin and silver futures contracts. Previously, on the 26th, the SHFE announced actions against three groups of 16 clients for similar suspected violations in tin and silver futures, also imposing one-month restrictions on opening positions and withdrawing funds. On the same day, the Guangzhou Futures Exchange (GFEX) announced that recently, one group of 8 clients was suspected of failing to report their actual controlling relationship as required and exceeding the prescribed trading limits in lithium carbonate futures contracts. According to relevant risk management rules, the exchange decided to impose restrictions on opening new positions and withdrawing funds for these clients. The GFEX had previously stated it would adhere to a principle of strict supervision, continuously strengthen market oversight, rigorously investigate various violations, enhance the investigation and identification of accounts with actual controlling relationships, leverage collaborative regulatory efforts, and crack down on market manipulation according to the law to maintain market order. Analysts warn of short-term gold price correction risks. This week, gold prices continued their surge, with the spot price of London gold firmly holding above the $5,000 per ounce mark. "The current gold rally was triggered by the Greenland incident, which sparked selling of credit assets like US Treasuries. Combined with tensions in the Middle East, prices have repeatedly hit new highs," Li Mingyu, Deputy Director of the Xinhu Futures Research Institute and senior gold investment analyst, explained. The Greenland incident has reduced trust between the US and Europe, making the purchase of safe-haven assets like gold a safer choice for Europe. Additionally, last week, Japanese Prime Minister Sanae Takaichi dissolved the lower house for a snap election, making a reduction in the food consumption tax a core campaign promise while continuing her proactive fiscal policy. As the food tax has never been cut since its introduction in 1989, this move is seen as breaching the last bastion of Japan's fiscal discipline. This led to heavy selling of Japanese 30-year government bonds, reigniting market concerns about fiscal credibility in developed economies and consequently boosting demand for precious metals. Zheng Hong, Chief Macro Analyst at Zheshang Futures Research Center, also believes the primary driver behind the recent new highs for gold is safe-haven demand. First is the Greenland issue. The current interest game between the US and Europe over Greenland has intensified. The Trump administration previously threatened tariffs on eight European countries, and although these were later rescinded, market concerns about geopolitical fragmentation remain. Second is the situation in Iran. Recent new US sanctions on Iran's energy sector and the deployment of military assets near Iran have heightened market risk aversion. Third is the questioning of Federal Reserve independence. The criminal investigation into Fed Chair Powell in January suggests further pressure from the White House on the Fed, continuously strengthening gold's safe-haven appeal. Driven by these diverse safe-haven demands, the market anticipates central banks will continue to increase gold holdings. Multiple factors are jointly pushing prices higher. After breaking through $5,000 per ounce, risks for gold are also accumulating. Zheng Hong noted that on one hand, short-term market risk sentiment is highly uncertain. On the other hand, expectations for a US rate cut in the first quarter are low, providing limited support for gold. The probability of a Fed rate cut this week is less than 5%, making it highly unlikely. Furthermore, after three consecutive cuts in the fourth quarter of 2025, some officials have signaled a pause in the pace of easing. Notably, the Gold VIX index has risen rapidly since mid-January and is now very close to its historical high from last October. Li Mingyu cautioned about the risk of a short-term correction in gold prices. "Market expectations for this week's FOMC meeting are already well-absorbed, with the probability of rates remaining unchanged seen as nearly 100%. Additionally, this meeting is a minor one, with no release of dot plots or other documents; limited new information is expected. Attention should be paid to Powell's post-meeting comments," he said. Also worth watching is the selection of the next Fed Chair. Treasury Secretary Besant indicated an announcement could come as soon as this week. BlackRock executive Reed has emerged as a 'dark horse,' surpassing former Fed Governor Warsh as the leading candidate. Some analysis suggests the nomination remains fluid, but the final candidate will likely be chosen from these two. Li Mingyu believes that if Warsh is selected, precious metal prices might experience a阶段性 correction. If Reed is chosen, the probability of further price increases is higher. Furthermore, influenced by a fatal shooting in Minneapolis, Senate Democrats have abruptly changed their stance, demanding modifications to a key government spending plan. This has significantly increased the probability of another US government shutdown before the end of January, posing a risk that key US economic data could be missing, which would also be bullish for gold.
Comments