HG MARKETS:

Recent tariff threats and reversals by Donald Trump, particularly concerning Canada and Mexico, have contributed to a weakened US Dollar, reflecting increasing uncertainty in US trade and monetary policies. Despite the current volatility, the US Dollar’s long-term trend remains upward.

In the bond market, the 10-year Treasury yield has fallen below 4.5%, easing concerns about inflation. This decline, along with the Federal Reserve’s pause on interest rate hikes, has reduced pressure on long-term rates. As a result, lower yields have made gold more appealing, as holding non-yielding assets like gold becomes less costly. Gold has surged to record levels, surpassing $2,795 and pushing toward $3,000, driven by ongoing geopolitical and economic uncertainties, which have bolstered safe-haven demand. In contrast, silver has lagged due to its reliance on industrial demand, which currently lacks strong growth drivers.

Private businesses in the US added 183,000 workers in January, surpassing both the revised December figure of 176,000 and the forecast of 150,000. Consumer-facing industries led the job growth, while business services and production sectors lagged behind. However, initial jobless claims also rose, with 219,000 claims filed in the last week of January, slightly above the forecast of 213,000. This increase is consistent with expectations of a mild labor market slowdown in 2025. Markets are now awaiting the US nonfarm payroll data, which could influence the next moves in the US Dollar, gold, and silver.

Technically, gold’s price chart shows strong bullish momentum, as the metal trades within an ascending channel and a broadening wedge formation. After breaking above $2,795, gold is aiming for $3,000. A brief price correction was quickly reversed, indicating persistent buying pressure. On the 4-hour chart, gold has extended its rally above $2,820 and is approaching the upper range of the ascending channel, which could lead to further gains if it breaks key resistance levels.

Silver, on the other hand, has reached a key level around $32.50 and is showing signs of bullish momentum. Although silver has not matched gold’s performance due to weaker industrial demand, a breakout above $32.50 could pave the way for a move toward $34.80 and possibly $43. On the 4-hour chart, silver has broken a descending trendline, and its consolidation at $32.50 increases the chances of an upward breakout.

The US Dollar Index is consolidating above the 107 level, but volatility remains high. Although the long-term trend is still bullish, supported by key levels and moving averages, the short-term direction is unclear amid ongoing economic developments. The formation of an ascending broadening wedge pattern on the 4-hour chart signals potential for further price swings, and if the index fails to break above 110, a bearish move below 107 could send the dollar toward the 105.60 zone. Friday’s release of nonfarm payroll data will likely influence the next move for the dollar.