Gold Falls on Softer US Data, Rate Cut Expectations

Gold fell by $34 per ounce on Tuesday, closing at $5,023 still near a two-week high as recent US economic indicators reinforced expectations for Federal Reserve policy accommodation. A series of softer activity metrics—including stagnant December retail sales, a 0.1% decline in the GDP control group, job openings falling to their lowest level since 2020, and private payroll growth missing forecasts—collectively point to moderating demand and easing inflationary pressures.

Market pricing currently reflects expectations for at least two rate cuts this year, providing broad support for non-yielding bullion. White House economic adviser Kevin Hassett acknowledged Monday that job growth is likely to decelerate in coming months due to demographic headwinds. These developments have shifted rate expectations lower and strengthened the fundamental case for monetary easing later this year.

Structural demand from official sector buyers remains robust, with the People's Bank of China extending its gold purchasing streak to fifteen consecutive months in January. Geopolitical uncertainty continues to underpin haven flows, as US-Iran tensions persist despite tentative diplomatic engagement, limiting downside risks.

Market focus now shifts to delayed US employment data due Wednesday and inflation figures scheduled for Friday, which will provide further clarity on the Fed's policy trajectory.

Silver closed 3% lower at $80.58 per ounce on Tuesday, ending a two-session advance as profit-taking emerged and volatility persisted following the historic late-January liquidation event. The metal remains approximately 30% below its late-January peak after a selloff that briefly wiped out nearly half its value. US Treasury Secretary Scott Bessent has attributed the extreme price swings to speculative positioning, particularly among Chinese market participants.

Despite the pullback, silver found support from the same weaker economic data that bolstered expectations for easier monetary conditions.

Technical Outlook

From an Ichimoku perspective, gold's technical structure remains neutral-to-bullish, with futures prices trading above the conversion line, base line, and both leading spans. However, recent horizontal alignment of the base line, conversion line, and cloud suggests the trend has shifted from fully bullish to neutral with a bullish bias.

Spot gold and silver markets present a more cautious picture, with a bearish crossover forming between the base (red) and conversion (blue) lines. Silver's spot and futures charts display additional bearish signals, including the lagging span (green) crossing into historical price action.

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