The announcement regarding the replacement of Federal Reserve Chairman Jerome Powell has now been made public. Former Fed Governor Kevin Warsh will be assuming the Fed’s responsibilities. He is regarded as experienced and traditional in his approach, which is expected to help restore stability and uphold the Federal Reserve’s independence.
In other news, last week experienced significant fluctuations in the prices of gold and silver, likely experiencing one of their most turbulent sessions ever.
The US Dollar took a hit after Donald Trump expressed no concern over a weaker Dollar, resulting in a drop of the USD index to a record low.
The market is also closely monitoring developments in the Gulf, particularly the tensions between the US and Iran. Rising oil prices are an important factor to consider regarding this evolving situation. If conditions worsen, attention will turn to the Strait of Hormuz, the region’s primary supply route, which could also affect pricing.
There is hope that all involved parties will engage in dialogue to resolve the issue, preventing conflict. Higher oil prices can disrupt economic growth, and even a prolonged situation will keep oil prices elevated, which hampers growth and triggers inflation.
A de-escalation of tensions would likely lead to a decrease in oil prices. Furthermore, OPEC was scheduled to convene on February 1st.
Last week, the market experienced strong volatility in the prices of gold, silver, and the USD in relation to major currencies. Silver saw a significant drop of over 25%, while gold fell by more than 15% before the recovery.
While some might label this a correction, there has been no shift in the geopolitical situation, and tariffs continue to threaten economies.
An increase in the US Producer Price Index (PPI) reported last week surpassing expectations indicates that tariff-related costs are contributing to rising prices.
The outcome of the January FOMC meeting suggests that the Fed is in no rush to resume easing policy rates, as the economy stabilizes and the labour market is less strained than before.
Overall, the FOMC’s assessment appears positive, highlighting improvements in the economy.
However, the announcement of the new Fed Chairman may have provided some reassurance in the market, potentially leading to a correction, the effects of which may become clearer in the coming days or weeks. Following the extreme volatility in the financial markets, traders will likely be closely observing market sentiment and movements on Monday morning.
At the time of writing this post, the status of the pending government funding bills remains uncertain, which will also be a key factor influencing market movements.
In the meantime, while we have observed some extraordinary developments in the metal market, the future direction will likely become clearer in the next few days or weeks.
Interestingly, my previous forecast for gold at USD 5500 by December 2026, which I shared in Business Recorder on October 13, 2025, has been reached much sooner than anticipated.
Consequently, I am adjusting my target for December 2026 upward to USD 5880.
So far, nothing has fundamentally changed. The geopolitical landscape remains fragile and has deteriorated further when considering ongoing global trade issues and security concerns.
Trust in the US Dollar and related assets continues to decline. We can clearly see a shift in Central Bank’s investment strategies as they explore alternative options, and investors are likely to follow this trend.
Central banks are expected to step in and buy at lower price points to enhance their portfolios.
Ultimately, market dynamics will be driven by supply and demand. This suggests an increase in demand for metals, which will likely elevate commodity prices.
Honestly, I don’t expect to see another substantial drop of 15 percent to 16 percent all at once. That decline was a historic, one-time occurrence.
Gold is supported at USD 4420 and again at USD 4210. The speed of any upward movement will largely hinge on geopolitical developments, with Central Bank purchases remaining a key influence.
In my view, demand for physical gold from Russia and Iran will alter market forecasts and maintain strong interest in gold. With a projected global growth rate of 3.3 percent and rising economic activity, a considerable amount of liquidity will likely shift toward gold.
If funds are not reinvested in US Treasuries, options will be limited. Therefore, if gold breaks through USD 5480, we could see an additional upward movement of around USD 300 to USD 400, potentially reaching USD 5880.
WEEKLY OUTLOOK — FEB 2-6
GOLD @ USD 4892— Gold is set for another highly volatile week, with trading anticipated to fluctuate significantly. While gold could experience further declines, as renewed buying interest is likely to aid its recovery. Key support levels are at USD 4760 and USD 4640, with potential break risks at USD 4519. On the upside, if it breaks through USD 5090, it could rise towards USD 5180 and beyond. I wouldn’t be surprised to see buying interest emerge during price dips.
EURO @ 1.1848— Euro has support at 1.1740. As long as it remains above this level, it is expected to trend higher. It will need to surpass 1.1970 to potentially reach the 1.2050 levels.
GBP @ 1.3682— Pound Sterling needs to hold 1.3570 levels. Otherwise, it could drop further to around 1.3490. On the other hand, if it breaks through 1.3780, it could rise to 1.3850.
JPY @ 154.75— The $/Yen pair needs to break past 156.20 to touch 157.60. If it doesn’t, it may weaken. However, a decline below 153.70 poses a risk to drop to 153.10.
Copyright Business Recorder, 2026
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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