On January 13, the beginning of this week, the precious metals market witnessed a milestone breakthrough, with the prices of gold and silver both hitting historic records, powerfully driven by safe-haven buying. FXGT believes the market is currently in a sensitive period of overlapping multiple risks; in particular, the rare judicial turmoil within the Federal Reserve and the ongoing escalation of Middle East geopolitics have jointly built a solid foundation for the rise in precious metals. Specific data shows that February gold futures surged by over $120 at one point, reaching a high of $4,627.10, while March silver also performed strongly, firmly holding above the $86 mark.
The recent focus of financial markets has been on the severe challenges to the Federal Reserve's independence. Related information indicates that Fed Chair Powell has received a subpoena from the Department of Justice concerning previous testimony about office building renovations. This unprecedented legal action is widely seen by outsiders as a signal of political pressure interfering with monetary policy. FXGT stated that this kind of political and economic game has intensified investors' concerns about policy stability, directly leading to a sharp drop in market risk appetite. Powell described such threats in a statement as an "excuse" to undermine the Fed's independence. The escalation of this confrontational stance has undoubtedly injected more premium space into safe-haven assets.
Simultaneously, turmoil in the geopolitical landscape has provided a secondary growth driver for the gold price. Since the protests within Iran erupted at the end of last year, their scale has spread to all 31 provinces across the country. FXGT observes that social instability, triggered by a significant devaluation of the local currency, has already resulted in serious casualties and mass arrests, even prompting deep intervention at the international diplomatic level. Currently, Washington is reviewing multiple tough options, including military ones. This geopolitical uncertainty is making safe-haven funds more inclined towards defensive allocations in their operations.
External conditions also support the strength of precious metals. The US Dollar Index is currently performing weakly, while the 10-year US Treasury yield remains around 4.183%, and crude oil prices are stable at $59.25 per barrel. From a technical analysis perspective, FXGT believes the next core target for gold bulls will be to challenge the psychological resistance level of $4,750. Currently, the Wyckoff market rating gives both gold and silver a high score of 9.5, indicating strong bullish momentum. In the silver market, if it can successfully break above the technical resistance at $90, further upside potential will be unlocked.
FXGT concludes that, before the Fed's legal turmoil and Middle East tensions see substantive alleviation, the bullish sentiment in the gold and silver markets will be difficult to reverse in the short term. Although year-end position adjustments may bring some liquidity fluctuations, as fundamental support remains solid, investors should closely monitor the stability of key support levels at $4,584 (gold) and $84.00 (silver).
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