OPINION: Prices of gold, silver will be influenced by various factors

With inflation starting to cool and consumer spending picking up at a more favourable rate, there are improved indicators of the US economy’s ongoing progress. The increase in home sales for the fourth consecutive month has further bolstered confidence.

Last week’s economic data presented a balanced view of the economy, reinforced by the Beige Book, which confirmed rising economic activity, a stable labour market, and stable inflation. Initial jobless claims dropped more than anticipated on Thursday.

Additionally, US retail sales were unexpectedly robust, rising by 0.6 percent compared to the expected 0.2 percent. This suggests that the Federal Reserve may avoid aggressive rate cuts and likely won’t take action this month, although the market is correctly pricing in a rate cut in the months to come.

On the global front, it is important to consider recent developments. A variety of issues political, financial, and trade-related have continuously disrupted the global economic system, leading to concerning conditions for world economies and investors.

These recurring disruptions have unsettled structural, fiscal, and monetary systems, contradicting established principles, with geopolitical factors often to blame. Currently, there is no indication that these issues will resolve in the near to medium term, as political interference in economic processes has been a significant contributor to the problem.

As long as such uncertainty persists, the outlook for economic growth and inflation across global economies will remain unpredictable and uncertain.

While some economies may see temporary relief, others could face negative impacts, and overall stability an ideal outcome is not guaranteed.

Regarding the fate of the US Dollar, the market is anticipating a rate cut in the coming months, which could negatively affect the currency.

However, if US inflation surprises on the upside in the following weeks, it could complicate the Fed’s ability to lower interest rates, helping the Dollar remain strong for longer than anticipated.

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I believe there are two main concerns currently troubling the financial sector. First, there is the pending US court decision regarding the legality of Donald Trump’s tariff decision, which could have substantial implications for the global economy. The ruling has yet to be issued.

Additionally, the conflict between the US administration and the Federal Reserve is unsettling for the financial industry. This tension arises because it is the Fed’s duty to manage monetary policy independently of political influences, focusing on price stability and job creation. This situation may persist until the new Chairman officially assumes office.

Given the unpredictable market conditions, the prices of gold and silver will be influenced by various factors.

We can expect to see new highs fueled by geopolitical uncertainty, along with sharp declines if any positive developments occur.

However, it is clear that the market will not stabilise easily. It is going to be a lengthy and challenging process.

Regarding the future of gold, it is quite common to discuss the market’s unease because of the rising gold prices over recent years, which many believe indicate a significant correction is forthcoming.

Yet, whenever market conditions improve, buyers tend to rush in to purchase the metal.

Beyond geopolitical concerns, two additional factors likely to continue driving demand for gold are central bank purchases and the weakness of the US dollar. Other investment options seem either highly risky or insufficiently liquid to draw in investors.

Meanwhile, my concern is that the USD is no longer linked to physical assets since the gold standard was abandoned in 1971. The implementation of quantitative easing (QE) and extensive money printing has diminished purchasing power through inflation.

Given this situation, it is hard to understand why investors would have faith in cryptocurrencies, which are still in their infancy, lack physical backing, and don’t have comprehensive government support or regulators full approval.

As a result, physical commodities such as gold and silver are anticipated to remain prominent.

WEEKLY OUTLOOK — JAN 19-24

GOLD @ USD 4,595— Volatility is likely to remain a prominent factor, with gold expected to fluctuate within a broader range. There will be renewed buying interest if gold prices decline. Key support levels are around USD 4,510 and USD 4,425. On the upside, surpassing USD 4,695 could lead to a further rise to USD 4,725.

EURO 1.1600— A slight decline could drive the Euro down to the support level of 1.1510 before it bounces back up. However, if it surpasses 1.1745, it is likely to aim for 1.1820. If the support is breached, keep an eye on 1.1475.

GBP 1.3383— The Pound Sterling might rise slightly, but it has to move beyond 1.3475 to continue gaining. There is a risk that if it falls below 1.3305, Cable could drop to 1.3240.

JPY 158.12— The $/Yen has the potential to move within a broader range. Key levels to keep an eye on 157.10. If it breaks below this level, it could dip down to 156.50 before bouncing back up again. On the other hand, a rise past 159.40 could pose a threat to reach 160.

Copyright Business Recorder, 2026