Gold and Silver Retreat as Fed Rate Cut Bets Fade, Prices Remain Above Key Psychological Levels

New York | EcoPulse24

Gold and silver prices fell during Thursday trading as markets repriced U.S. monetary policy expectations following robust labor market data, which strengthened the case for the Federal Reserve to maintain interest rates for an extended period. Investors are now awaiting U.S. inflation data to determine the next direction for precious metals.

Gold settled at $5,056 per ounce, down 0.57%, trimming gains from the previous session. Despite the decline, prices held above the $5,000 per ounce mark, a key psychological level that underscores continued structural support for the metal. U.S. jobs data showed an addition of 130,000 jobs in January and a drop in unemployment to 4.3%, indicating a resilient labor market at the start of 2026.

The strength of the data led traders to push back expectations for the next rate cut from June to July, resulting in higher U.S. Treasury yields and raising the opportunity cost of holding non-yielding gold. Nevertheless, gold retained much of its recent gains, having recovered about half of a sharp 13% loss over two sessions earlier in the month.

Silver dropped over 2% to trade near $83.64 per ounce after a rally in the prior session. The decline reflected silver’s greater sensitivity to changes in U.S. yields and monetary policy, due to its dual role as an industrial and safe-haven asset. The strong labor data reinforced the Fed’s cautious stance, putting pressure on precious metals overall.

Despite the setback, precious metals remain supported by several factors, including ongoing central bank purchases, currency hedging, and persistent geopolitical risks. Rising concerns over global sovereign debt are also fueling the so-called “currency weakening trade,” prompting investors to seek tangible assets as a hedge against currency volatility.

Attention now turns to the upcoming U.S. Consumer Price Index report, which will be a critical test for monetary policy direction. Any inflation surprises could strengthen the case for prolonged rate stability, while slowing inflation may revive upward momentum for gold and silver.

EcoPulse24 Analysis:
The current pullback in gold and silver reflects a technical correction driven by repricing of rate expectations, not a fundamental shift in long-term supportive factors. Gold’s resilience above $5,000 signals strong demand, underpinned by official purchases and ongoing geopolitical risks. Silver remains more volatile due to its industrial linkages. Continued robust U.S. data could exert further short-term pressure, but the structural outlook for precious metals remains tied to inflation and global debt, keeping them core defensive assets in investment portfolios.