Gold falls 1.5% on firm US dollar, silver recovers from over three-week low

[BENGALURU] Gold extended falls on Monday (Feb 2), pressured by a firm US dollar, as investors gauged US President Donald Trump’s Fed chair pick Kevin Warsh’s approach to interest rate cuts, while silver recovered from a more than three-week low hit on Friday.

Spot gold was down 1.5 per cent at US$4,793.97 per ounce, as at 8.46 am, after touching a more than one-week low on Friday. Bullion scaled a record high of US$5,594.82 on Thursday.

US gold futures for February delivery climbed 1.6 per cent to US$4,818.10 per ounce.

Spot silver rose 1.6 per cent to US$85.98 an ounce. It hit a record high of US$121.64 on Thursday.

The US dollar clung onto its gains as investors weighed what a US Federal Reserve under Warsh might look like, with his preference for a smaller balance sheet.

A stronger US dollar makes greenback-priced gold less affordable for holders of other currencies.

Warsh checks a long list of boxes for Trump as his pick to run the Fed, with longstanding political and social ties to the president, deep Wall Street connections and a well-tailored demeanour.

But how deeply and quickly he will cut interest rates and how aggressively he will pursue his “regime change” at the Fed remain open questions.

US economic data on Friday showed that producer prices increased by the most in five months in December amid some pass-through from import tariffs, suggesting inflation could pick up in the months ahead and allow the Fed to keep rates steady for a while.

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Investors still expect at least two rate cuts in 2026.

Non-yielding bullion tends to perform better in low-interest-rate environments.

Spot platinum lost 2 per cent to US$2,120.05 per ounce after hitting a record US$2,918.80 on Jan 26, while palladium shed 0.9 per cent to US$1,682.59. REUTERS