Gold Drops Below $5000 Amid Weak Trading.. Silver Recorded Close to $74 an Ounce

SadaNews - Gold fell further to below the $5000 per ounce level in weak trading, with most Asian markets closed due to the Lunar New Year holiday, following a holiday in the United States on Monday.

The precious metal declined by as much as 1.4% on Tuesday, after losing 1% in the previous session. The metal had briefly risen on Friday when moderate U.S. inflation data bolstered the case for the Federal Reserve to cut interest rates. Low borrowing costs are a supportive factor for non-yielding precious metals.

Sharp Volatility After Speculative Buying Spree

A wave of speculative buying pushed prices higher for several years to a breaking point in late January, when gold jumped to a record level above $5595 an ounce.

A sharp and unexpected sell-off that lasted for two days at the beginning of the month brought the metal down to near $4400, but it has since regained about half of its losses. Trading has remained volatile since then.

Many banks, including BNP Paribas, Deutsche Bank, and Goldman Sachs Group, expect prices to resume their upward trend as the factors supporting the steady rise in gold persist. These factors include rising geopolitical tensions, questions about the independence of the Federal Reserve, and a broader shift away from currencies and sovereign bonds.

Long-term Forecasts Support the Metal

Analysts at Jefferies, including Fahd Tariq, wrote in a note: "We still see two major macroeconomic factors supporting gold: inflation and the erosion of the dollar's value," raising their 2026 price forecast to $5000 per ounce from $4200.

They added that worried investors and central banks regarding these factors "really have no option but to turn to physical assets."

However, in the near term, the risks of a decline will increase the longer the precious metal remains below the $5000 level, as this "will deter more optimistic traders in light of recent volatility," according to Fouad Rizk Zada, an analyst at City Index, in a note.

The spot gold price fell by 0.5% to $4967.82 per ounce as of 10:25 AM in Singapore. Silver dropped by 0.4% to $76.30 per ounce.

Platinum saw little change, while palladium fell by 1.1%. The Bloomberg Spot Dollar Index, which measures the performance of the U.S. currency, was stable after finishing the previous session up by 0.1%.

Meanwhile, silver prices were recorded close to $74 per ounce.