Precious metals under pressure: gold and silver experience significant declines as markets recalibrate

The Thursday US trading session saw gold and silver prices undergo substantial corrections. In particular, silver experienced a notably weak performance, with traders liquidating long positions previously built. This downward movement reflects not only short-term profit-taking by traders but also a renewed structural pressure on the precious metals market.

Detailed Price Dynamics

February gold futures closed at $4,431.70 per ounce, down $30.80. Meanwhile, March silver futures experienced an even sharper decline, falling to $73.83 per ounce, a decrease of $3.783. These movements highlight how silver continues to exhibit higher volatility compared to gold, a typical characteristic of this industrial metal.

The Index Rebalancing Factor

One of the main causes of this downward pressure stems from the annual rebalancing of commodity indices. Market participants are preparing for what could be a significant capital outflow from the sector. According to Citigroup estimates, rebalancing could involve the sale of approximately $6.8 billion worth of silver futures, accompanied by comparable outflows in the gold market. The increased weighting assigned to precious metals in benchmark indices has generated these anticipated selling pressures. Traders are already positioning themselves in anticipation of this event in the coming days.

Unfavorable Macroeconomic Context

A bearish technical setup has solidified in the silver market, amplifying panic selling among investors. A well-established principle in financial markets states that mature bull cycles require a continuous influx of positive news to sustain them. Currently, this supportive catalyst appears to be lacking for both gold and silver. US labor market data present a mixed picture: the number of layoffs announced in December fell to the lowest level since July 2024, with 35,553 positions eliminated compared to 71,321 in November. However, the annual data for 2025 reveal a very different situation, with a total of 1,206,374 layoffs announced, a 58% increase over the previous year. The government sector led this ranking with 308,167 layoffs, primarily at the federal level, while the private sector saw the largest job losses in the tech industry, totaling 154,445 positions.

Technical Outlook and Key Resistances

Technical analysis of February gold futures identifies the all-time high of $4,584.00 per ounce as the next bullish target if a close above this level is achieved. Conversely, bears are aiming to push the price below the key technical support at $4,284.30 per ounce. In the short term, the first resistance is at the previous night’s high of $4,475.20 per ounce, while the first support is at $4,400.00 per ounce, followed by the weekly low at $4,354.60 per ounce.

For the silver market, March futures have shown movements raising concerns among technical analysts, with the formation of an inverted double top pattern on the daily chart. The next bullish target for bulls is the all-time high at $82.67 per ounce, while bears aim for a close below the key support at last week’s low of $69.225 per ounce. The first resistance for silver is at $75.00 per ounce, with the next support level at $74.00 per ounce.

Implications of US Government Policies

The US Supreme Court is set to rule on the constitutionality of tariffs implemented by the Trump administration. The decision could come as early as Friday and would have significant implications for the global economy. Lower courts have already ruled that President Trump’s use of the 1977 International Emergency Economic Powers Act to support large-scale reciprocal tariffs exceeded his constitutional authority. If the Supreme Court agrees and declares these tariffs illegal, most measures imposed during his second term could be revoked, exposing the US government to potential refunds of tens of billions of dollars.

Meanwhile, President Trump announced plans to increase the US defense budget by $500 billion, bringing it to $1.5 trillion. This significant increase reflects a more assertive geopolitical strategy, although Trump has threatened to exclude certain companies from bidding that could profit from the increased spending. An executive order has mandated major defense contractors to suspend share buybacks and dividends until investments in manufacturing facilities and R&D increase, also setting a cap on executive compensation at $5 million annually. These measures have caused a decline in the stock prices of leading defense contractors.

The Energy Market and Venezuelan Strategy

One of the most disruptive economic news of the week concerns the announced US strategy regarding Venezuelan oil resources. The Trump administration intends to take control of up to 50 million barrels of Venezuelan oil, an unprecedented intervention that could represent one of the most significant changes in global energy supply in recent years. The president stated the intention to rebuild the Venezuelan oil industry in the coming years on highly profitable bases.

This strategy involves direct participation of the federal government in the international oil market and could restart Venezuelan crude supplies to US refineries after years of trade sanctions. US oil traders and refineries are already reorganizing their positions to secure access to Venezuelan crude. Despite Venezuela possessing the largest oil reserves in the world, decades of underinvestment, economic isolation, and sanctions have reduced production below one million barrels per day. The impact of this news was immediate: Canadian oil prices plummeted significantly, while benchmark crude futures faced downward pressure. Oil prices are currently trading around $57.00 per barrel, although major US oil companies remain cautious and await clear political and legal guarantees before engaging in the Venezuelan market.

Overall Market Outlook and Global Context

The dollar index experienced a slight appreciation, while the yield on 10-year US Treasury bonds stands at 4.16%. The overall picture shows multiple pressures on gold and silver, stemming from both technical and fundamental factors, in a context where US economic policies continue to introduce uncertainty into global markets.