Gold prices extended losses into a second consecutive session on Tuesday, trading near 4,937 United States dollars (USD) per ounce as thin holiday volumes amplified selling pressure that has pulled bullion sharply back from record highs hit less than three weeks ago.
Markets in China and several Asian countries remained closed for Lunar New Year celebrations, reducing participation significantly and magnifying price movements in what traders described as a technically driven pullback. A United States public holiday on Monday also kept American players largely on the sidelines.
The current retreat follows one of gold’s most dramatic periods of volatility on record. Spot gold climbed to an all-time peak of approximately USD5,418 per ounce on January 29 before collapsing by nearly 10 per cent the following day in one of the largest single-day declines in the precious metal’s history. A partial recovery since then has left prices consolidating in the USD4,900 to USD5,100 range as markets reassess the outlook.
Several factors are driving the correction. News that United States President Donald Trump is set to nominate former Federal Reserve (Fed) official Kevin Warsh as the next Fed chair, replacing current chairman Jerome Powell when his term expires in May, rattled investor confidence in monetary policy continuity. Warsh is widely regarded in financial circles as a hawk, meaning he favours higher interest rates to control inflation, a stance that reduces gold’s attractiveness as a non-yielding asset.
Trump has been consistently critical of Powell for not cutting interest rates quickly enough. The prospect of a more politically aligned Fed chair has raised concerns among investors about the institution’s independence, contributing to erratic market movements that have simultaneously weakened the US dollar and created uncertainty about the pace of future rate cuts.
Markets currently price in slightly more than two rate reductions in 2026, with July emerging as the most likely starting point for an easing cycle. Lower interest rates historically support gold by reducing the opportunity cost of holding bullion versus interest-bearing assets such as bonds and savings instruments.
Investors are awaiting several key economic releases that could shape expectations for the timing of those cuts. The Federal Open Market Committee (FOMC) meeting minutes, the advance first-quarter gross domestic product (GDP) estimate and the Personal Consumption Expenditures (PCE) inflation report are among the most closely watched upcoming data points. The PCE measure is the Fed’s preferred gauge of price pressures.
Geopolitical developments continue to provide a partial floor for gold prices. United States-Iran nuclear negotiations are set to resume amid elevated regional tensions, while peace talks between Russia and Ukraine began in Geneva on Tuesday. Such uncertainty traditionally strengthens demand for safe-haven assets, though market participants appear to be balancing those risks against the shifting monetary policy landscape.
The broader structural backdrop for gold remains bullish. In 2025, global gold demand rose to 5,002 tonnes, the highest annual figure on record, driven by central bank accumulation, exchange-traded fund (ETF) inflows and retail investor demand. Central banks purchased 863 tonnes in 2025 and are expected to remain significant buyers in 2026, with Poland, Brazil and China leading official sector demand.
Major financial institutions remain broadly positive on gold’s long-term trajectory. Goldman Sachs projects prices reaching USD4,900 per ounce by year-end, while JPMorgan forecasts an average of USD5,055 per ounce in the fourth quarter of 2026. State Street’s analysts have identified a structural bull cycle underpinned by continued Fed easing, geopolitical risk premiums and sovereign debt concerns.
Ghana, Africa’s largest gold producer, stands particularly exposed to gold price movements. The Ghana Chamber of Mines has noted that the country’s mining revenues, which accounted for approximately 48 per cent of merchandise export earnings in 2025, are sensitive to both price levels and currency fluctuations between the US dollar and the Ghana cedi.
