Gold prices reclaimed the psychologically crucial level of $5,000 per ounce on Monday as economic data from the weekend boosted sentiment.
A weaker dollar against a basket of major currencies lifted prices as it makes commodities priced in the greenback cheaper for overseas buyers.
Gold experienced a surge, moving beyond the significant $5,000 level during Monday’s Asian trading session as data from the weekend revealed that the People’s Bank of China (PBOC) continued its gold buying for the 15th consecutive month in January.
Last month, China’s gold reserves expanded by 40,000 ounces, reaching a total of 74.19 million.
Consequently, the monetary value of these reserves climbed to $369.58 billion.
Gold reclaims $5,000: drivers and market positioning
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Gold prices on COMEX last traded at $5,053 per ounce, up 1.4% from the previous close.
“Moreover, dovish US Federal Reserve (Fed) expectations and concerns about the central bank’s independence drag the US Dollar (USD) lower for the second straight day, providing an additional boost to the non-yielding yellow metal,” Haresh Menghani, editor at FXStreet, said in a report.
Despite a combination of supporting factors, the commodity remains below last week’s swing high.
Following last week’s sharp selloff, gold and silver prices are showing signs of attempting to stabilise.
However, volatility persists, and both metals remain below key resistance levels.
While analysts caution about elevated near-term downside risks, there is a strong belief that the fundamental long-term growth drivers for gold and silver remain intact, according to a Kitco.com report.
Improved investor confidence in riskier assets, driven by the easing of Middle East tensions, is creating a positive trend in equity markets.
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This renewed risk appetite is consequently diminishing the appeal of safe-haven assets, such as Gold, acting as a headwind for the precious metal.
“Traders also seem reluctant to place aggressive directional bets and opt to wait for this week’s important US macro releases – the delayed Nonfarm Payrolls (NFP) report on Wednesday and the latest consumer inflation figures on Friday,” Menghani said.
The direction of the dollar and gold will be determined by the essential payrolls data, as it will provide insight into the Federal Reserve’s (Fed) trajectory for interest rate cuts.
Traders are now pricing in a higher likelihood of the US Fed reducing borrowing costs at least four more times in 2026, according to the CME Group’s FedWatch Tool.
This expectation for further policy easing by the US central bank was reinforced by recent US data, specifically last week’s indicators of labor market weakness.
Fed independence concerns and silver’s extreme volatility
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The independence of the US central bank is a growing concern following recent statements from the Trump administration.
US President Donald Trump indicated on Saturday that he might take legal action against his new Fed chair nominee, Kevin Warsh, should Warsh decline to lower interest rates.
Further escalating the situation, US Treasury Secretary Scott Bessent on Thursday did not dismiss the potential for a criminal investigation into Warsh if he refuses to implement rate cuts.
Meanwhile, silver’s movements have been even more dramatic, showing extreme volatility.
For instance, the metal recorded a staggering 27.8% intraday range on Thursday, which stands in sharp contrast to the typical daily movement of just over 2% observed over the last six years, Kitco said in the report.
Silver prices recently failed to sustain their rise above $90 an ounce.
Following a significant sell-off on early Friday, spot silver was last trading at $81.670 per ounce, up 6.1% on Monday.
According to Barbara Lambrecht, a commodity analyst at Commerzbank, guidance is still being sought by market participants in the precious metals sector.
Price fluctuations are likely to remain high for the time being. In the medium term, we consider precious metal prices to be well supported.
Michael Brown, a senior market analyst at Pepperstone, pointed out that silver’s one-month implied volatility is currently higher than Bitcoin’s.
Despite the ongoing market consolidation within a broad range, Brown anticipates that any dips will likely be purchased.
