Gold and silver extended their corrective phase for a third straight session on Wednesday, as a stronger US dollar and thin liquidity across Asian markets weighed on investor sentiment. During Asian trading hours, spot gold hovered near $4,901 per ounce, while spot silver slipped more than 1% to around $72.30 per ounce.
The pullback comes after a strong rally earlier this year that pushed both metals closer to historic highs. Despite the recent softness, gold remains roughly 15% below its all-time peak of $5,626.80 per ounce, while silver trades nearly 67% below its record high of $121.78 per ounce. Market participants are now closely monitoring macroeconomic signals and geopolitical developments to assess the next directional move.
Dollar Strength Caps Precious Metals
A key driver behind the current correction has been the renewed strength in the US dollar. The US Dollar Index rose about 0.40% to 97.28, making dollar-denominated commodities more expensive for holders of other currencies. Because gold and silver are priced in dollars globally, a stronger greenback typically dampens foreign demand and exerts downward pressure on prices.
Analysts note that the recent dollar appreciation reflects expectations around US interest rate policy. Investors are awaiting the release of minutes from the Federal Reserve’s January policy meeting, which could offer insight into the central bank’s stance on inflation and interest rates.
Higher interest rates tend to reduce the appeal of non-yielding assets such as gold and silver, as investors shift toward fixed-income instruments offering returns. Conversely, dovish signals from the Fed could revive appetite for precious metals.
Thin Liquidity Adds Volatility
Adding to the subdued tone was reduced participation in Asian markets due to Lunar New Year holidays. Major financial hubs including China, Hong Kong, Singapore, Taiwan and South Korea remained closed, resulting in lighter trading volumes.
Low liquidity environments often amplify short-term price swings. Traders appear to be adjusting positions cautiously, avoiding large directional bets until fuller participation returns and macroeconomic clarity improves.
Geopolitical Tensions Offer Support
Despite selling pressure, downside risks for precious metals may be limited by ongoing geopolitical uncertainties. The United States and Iran are set to hold indirect nuclear discussions in Geneva, though expectations of a breakthrough remain modest. Simultaneously, Washington’s increased military presence in the Middle East has kept safe-haven demand structurally intact.
Market strategists suggest that geopolitical tensions continue to provide a “floor” for gold prices. While safe-haven flows have moderated recently, sustained global instability typically underpins long-term investor interest in bullion.
Technical Outlook for Gold
From a technical perspective, analysts believe gold’s broader structure remains constructive. Prices continue to trade above long-term moving averages, indicating that the recent decline may represent a consolidation rather than a trend reversal.
Strong buying interest has emerged in the $4,500–$4,700 per ounce range. This support band aligns with prior breakout zones and trendline support levels. If gold stabilizes above this region, it could lay the foundation for renewed upward momentum.
On the upside, a decisive breakout above the $5,200–$5,300 zone would likely open the door for a retest of historic highs. Until then, markets may remain range-bound, influenced by macroeconomic data and Federal Reserve communication.
Silver’s Industrial Edge
Silver’s outlook presents a slightly different dynamic. While gold is primarily viewed as a monetary and safe-haven asset, silver has a dual identity serving both as a precious metal and an industrial input.
Recent weakness has pushed silver below key short-term moving averages, suggesting near-term bearish pressure. However, structural fundamentals remain supportive. Industrial demand, particularly from renewable energy, electric vehicles and semiconductor manufacturing, continues to underpin long-term consumption trends.
Technical analysts identify strong demand in the $65–$70 per ounce support range, which corresponds with previous swing lows. If prices hold this zone and recover above $85–$92, bullish momentum could re-emerge, potentially targeting the $95–$105 range over the medium term.
That said, silver’s higher volatility compared to gold means it is more sensitive to shifts in global growth expectations and investor risk appetite.
Macro Triggers Ahead
Beyond technical factors, several macro catalysts could shape the trajectory of precious metals in the coming weeks:
-
Federal Reserve policy guidance
-
US inflation data
-
Dollar index movements
-
Global geopolitical developments
-
Liquidity normalization as Asian markets reopen
For now, traders appear to be in a wait-and-watch mode. While short-term pressure persists, many analysts argue that the medium- to long-term case for precious metals remains intact, supported by geopolitical risk, central bank gold purchases, and structural industrial demand in silver.
As global markets navigate shifting monetary policy expectations and geopolitical uncertainty, gold and silver are likely to remain sensitive to both macroeconomic data and investor sentiment.
