Gold Corrects After Strong US Jobs Data, Fading Rate Cut Hopes?
Gold prices weakened after solid US jobs data led the market to lower expectations that the Federal Reserve would cut interest rates anytime soon. The data reinforced the view that the Fed still has reason to hold rates for longer while assessing the direction of inflation.
On Thursday, gold fell as much as 0.8%, after gaining 1.2% in the previous session. Reports showed US payrolls posted their biggest increase in more than a year, while the unemployment rate fell unexpectedly in January—signaling the US labor market remained stable in early 2026.
This combination of data prompted market participants to shift their estimates for the next interest rate cut to July from June. The shift in expectations put pressure on gold, as the precious metal—which does not yield a yield—typically benefits when interest rates fall.
However, gold's decline was limited, as prices remained above $5,000 per ounce and have recovered about half of the losses following the sharp sell-off at the turn of the month. Gold had previously touched a record high above $5,595 in late January, but an overheated rally fueled by speculative pressure triggered a sharp correction—a decline of around 13% in just two sessions.
Several major banks continue to believe that gold's uptrend has the potential to continue, as its main driving factors remain intact—ranging from geopolitical uncertainty, the issue of the US central bank's independence, and investors' tendency to reduce exposure to traditional assets such as currencies and government bonds. BNP Paribas, for example, still sees the potential for gold to reach $6,000 by year-end, while Deutsche Bank and Goldman Sachs also maintain their bullish forecasts.
On the other hand, silver has come under more pressure. On Thursday, the price of silver fell as much as 3.2%. Historically, silver has been more volatile than gold due to its smaller market size and thinner liquidity. In recent weeks, its movement has even been described as the most extreme since 1980, with prices dropping by about a third from their all-time high peak reached on January 29.
The silver correction followed a 4.3% surge in the previous session, triggered by a report by The Silver Institute that predicted the silver market would experience a deficit for the sixth consecutive year. The investment boost is believed to outweigh weakening jewelry demand and efforts to curb silver use in the solar panel sector.
In China, silver supplies are also said to remain tight as investment and industrial demand continue to deplete stocks. To stem outflows from warehouses, the Shanghai Futures Exchange is reportedly restricting certain parties—those using silver futures contracts for hedging—from carrying their contracts to the delivery stage.
At 9:59 a.m. Singapore time, spot gold fell 0.5% to $5,061.73 per ounce. Silver fell 1.1% to $83.39, platinum weakened 0.4%, and palladium fell 0.3%. Meanwhile, the Bloomberg Dollar Index edged down 0.1%.
Source: Newsmaker.id
