Executive Summary

Precious metals markets open the first full week of February with gold trading at $2,833.90, extending Friday's gains as unprecedented flows into US warehouses continue amid tariff uncertainty. The yellow metal has gained 7.8% year-to-date, breaking through $2,900 for the first time last week, while silver's 8.59% January surge positions it for potential outperformance.

This week's economic calendar features Friday's crucial nonfarm payrolls report, Thursday's Bank of England rate decision, and major tech earnings that could impact risk sentiment. With COMEX gold inventories surging 85% since mid-December to their highest levels since 2022, institutional positioning suggests continued strength as markets navigate Fed policy uncertainty, persistent inflation concerns at 2.8%, and escalating trade tensions following new steel and aluminum tariffs.

Current Market Position

Prices as of Monday, February 3, 2025 at 9:00 AM ET

COMEX gold inventories have reached 1,038 tonnes, marking an 85% increase since December 19 as financial institutions continue moving metal to US warehouses ahead of potential tariff implementations. This massive repositioning has created unusual backwardation in London markets, with Exchange for Physical (EFP) spreads reflecting the urgency of these flows.

Technical Analysis

Gold: Building Momentum Above Support

Gold's technical structure reflects a market in transition from impulsive advance to strategic consolidation, with key levels clearly defined after last week's historic breach above $2,900. The yellow metal currently trades within an ascending channel that has generated 27% gains since early 2024.

Immediate support sits at $2,780-2,790, aligning with the 21-day moving average that has contained pullbacks throughout January's advance. More significant support emerges at $2,750, where the 50-day average converges with the channel's lower boundary. Any daily close below $2,720 would signal a deeper correction toward $2,650-2,655, though such a move appears unlikely without a fundamental catalyst.

Silver: Oversold Bounce Opportunity

Silver's technical position appears more precarious after failing to hold above $32 decisively. The metal trades in a $31-33 range with multiple indicators flashing oversold conditions - RSI at 24.8, Williams %R at -95.5, and the stochastic RSI at zero. This extreme oversold status typically precedes sharp rebounds, particularly with the gold/silver ratio stretched to levels suggesting mean reversion potential.

Week Ahead Calendar

Key Themes for the Week

Tariff Uncertainty and Physical Flows

Tariff uncertainty continues driving the most dramatic repositioning in physical markets since the 2020 pandemic. The implementation of 25% tariffs on steel and aluminum has triggered massive metal flows from London to New York, creating a four-week backwardation in Loco London gold markets. Financial institutions are aggressively moving inventories to US warehouses, with COMEX holdings surging to levels not seen since June 2022.

Federal Reserve Policy Path

Federal Reserve messaging remains deliberately opaque following last week's decision to maintain rates at 4.25-4.50%. Chair Powell's emphasis on "elevated uncertainty" regarding trade, immigration, and fiscal policies has effectively pushed rate cut expectations from June to September or later. With core PCE inflation at 2.8% versus the 2% target, officials face a delicate balance between supporting growth and preventing inflation resurgence.

Central Bank Gold Accumulation

Central bank accumulation shows no signs of abating after 2024's record 1,000+ tonne purchases. January data reveals net buying of 18 tonnes led by Uzbekistan (8 tonnes) and China's resumption after a brief pause (5 tonnes). Poland's continued aggressive accumulation alongside purchases from India and Czech Republic underscores the strategic shift toward gold reserves amid geopolitical fragmentation.

Trading Scenarios

Economic Calendar Impact Analysis

The week's economic releases carry asymmetric impacts for precious metals, with employment data dominating but several under-appreciated reports potentially moving markets.

Tuesday's JOLTS data has gained importance as Fed officials increasingly cite job openings as their preferred labor market gauge. A reading above 8.5 million would suggest continued tightness, pressuring gold, while a drop below 7.8 million could spark a relief rally.

Thursday's Bank of England decision could surprise markets focused on US data. With UK inflation proving sticky, a hawkish hold or surprise 25bp hike would strengthen sterling and provide a template for other central banks battling inflation, potentially limiting Fed easing flexibility.

Friday's NFP impact extends beyond the headline number to include average hourly earnings, participation rate changes, and employment distribution across sectors. Markets will particularly scrutinize whether January's weather-related weakness reverses or represents a genuine cooling.

Week Ahead Outlook

As precious metals navigate this pivotal week, the path of least resistance remains higher despite extended positioning and overbought technical conditions in gold. The convergence of persistent inflation concerns, unprecedented physical repositioning to avoid tariffs, and central bank accumulation creates a supportive fundamental backdrop that should limit downside surprises.

Friday's employment report looms as the week's defining moment, but the buildup through JOLTS, jobless claims, and Fed commentary will likely telegraph the outcome. Markets appear positioned for a slightly weak but not recessionary print around 160,000 jobs, suggesting asymmetric risk to the upside if weather-related impacts reverse more than expected.

The most compelling opportunity may lie in silver's oversold condition coinciding with gold at resistance. A pairs trade long silver/short gold offers attractive risk/reward, particularly if industrial metals continue catching up to gold's advance. Platinum's technical breakout also warrants attention as the cleanest chart pattern in the complex.

Traders should prepare for elevated volatility around key releases while remembering that the broader trend remains supported by structural factors unlikely to reverse based on single data points. The combination of Fed uncertainty, fiscal policy questions, and geopolitical tensions suggests dips remain buying opportunities until proven otherwise, with $2,750 gold and $30.50 silver as lines in the sand for the bullish thesis.