(Kitco News) - Gold’s run to consecutive record highs appears to be stalling as the precious metal ends the week back below $2,900 an ounce on strong profit-taking.
While gold attracts the most attention in the marketplace, its selloff is muted compared to silver's disappointing breakout. Overnight, silver futures spiked sharply above $34 an ounce, hitting their highest level since late October. But the rally proved to be short-lived, as prices ended below $33 an ounce.
March silver traded at $32.585 an ounce as of 3:07 pm ET, up nearly% from last week; however, the precious metal is down more than 4% from its Friday session highs.
Meanwhile, gold is looking to eke out a small gain for the week, just barely notching a new all-time high. February gold futures last traded at $2,896.80 an ounce, up roughly $10 from last week.
Phillip Streible, Chief Market Strategist at Blue Line Futures, said that the selloff in silver has dragged the entire sector down. He added that while it was exciting to see the metal push back above $34 an ounce, because of its volatility, the move was too good to pass up for many investors.
“Silver has had a great run and for many investors who bought when prices were below $30, this was a great way to end the week,” he said.
At the same time, Streible said that easing geopolitical tensions are sapping gold’s safe-haven appeal.
This week, President Donald Trump spoke with Russian President Vladimir Putin on the phone about a potential end to the war in Ukraine. At the same time, while Trump continues to threaten the world with aggressive trade tariffs, he has delayed any major action until a country-by-country review has been conducted, which is expected to be completed by April.
However, at the start of the week, Trump also announced a 25% tariff on all steel and aluminum imports.
Despite the near-term volatility, many analysts expect gold prices to remain in a solid uptrend as U.S. policies remain unpredictable.
“Against a backdrop of economic and geopolitical uncertainty and President Trump's dithering, the steady rise in gold prices suggests an outlook that, while gloomy, is not yet catastrophic,” said Ricardo Evangelista, Senior Analyst at ActivTrades.
Despite Friday’s disappointing price action, Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, noted that the precious metal showed steady strength during a challenging week.
The U.S. Consumer Price Index showed annual inflation rising 3.0% in January, coming in higher than expected. At the same time, Powell, during two days of testimony on Capitol Hill, reiterated the central bank’s relatively neutral stance. He said the Federal Reserve is in no hurry to lower interest rates as inflation risks remain elevated and the labor market remains healthy.
“Gold’s resilience amid hotter-than-expected CPI data and Powell's cautious stance suggests strong underlying support, likely driven by persistent inflation concerns and safe-haven demand,” said Aslam. “Typically, higher inflation and delayed rate cuts weigh on gold due to rising real yields. However, with economic uncertainty mounting, especially as consumption weakens, investors may be positioning for potential stagflation risks. The market's muted reaction to Powell's comments indicates that traders had already priced in a higher-for-longer rate environment. Additionally, ongoing geopolitical tensions and central bank buying continue to provide a floor for gold.”
Julia Khandoshko, CEO at Mind Money, said she is looking beyond gold’s near-term volatility and any short-term correction as she expects gold to remain well supported through 2025.
She noted that even if inflation pressures remain elevated, central banks, led by the Federal Reserve, will be forced to cut rates as the global economy weakens.
At the same time, she expects gold to remain an important safe-haven asset.
“The level of uncertainty in the global economy is growing. The problem is not Trump's specific statements, but their frequency,” she said. “The more he speaks, the higher the level of chaos in the markets. Institutional investors are looking for reliable assets, and gold remains their main protective tool.”
Some analysts have said that gold will continue to be sensitive to geopolitical uncertainty during next week’s shortened trading schedule. U.S. markets will be closed on Monday for Presidents’ Day.
Markets will also see a relatively light economic calendar, with the minutes from the Federal Reserve's last monetary policy meeting being one of the highlights. However, economists are not expecting the minutes to reveal any new sentiment among the central bankers.
Economic data to watch next week:
Tuesday: Empire State Manufacturing Survey
Wednesday: U.S. Housing Starts and Building Permits, FOMC meeting minutes
Thursday: U.S. weekly jobless claims: Philadelphia Federal Reserve Manufacturing Survey
Friday: S&P Flash PMI, U.S. Existing Home Sales
