Commodity wrap: gold below $5,000, silver plunges on firm dollar

Gold and silver prices continued to fall on Tuesday as a stronger dollar and easing tensions dented safe-haven demand for the precious metals.

Silver prices on COMEX slumped more than 4% on Tuesday as investors remained cautious about the white metal’s prospects on the upside.

Meanwhile, oil prices were mixed, with the West Texas Intermediate in the green for most of the day before slipping slightly, while Brent was more than 1% down from the previous close.

WTI prices were at $62.59 a barrel, down 0.3%, while Brent was 1.5% lower at $67.64 a barrel.

Gold slips

Gold prices on COMEX slipped below the $5,000 per ounce mark as investors could not defend the level.

The COMEX gold contract was last at $4,870.21 per ounce, down 3.5%.

The selling started on Monday, and intensified on Tuesday as gold prices fell.

“The selloff came during an extended period of market illiquidity due to holidays across the US and Asian Pacific regions,” said David Morrison, senior market analyst at Trade Nation.

“Could this early weakness be a precursor to a larger pullback, or will it be viewed as a significant buying opportunity?"

The US dollar strengthened, with the index climbing 0.3% against other currencies.

This appreciation in the greenback increased the cost of dollar-denominated bullion for those holding other currencies.

Meanwhile, indirect nuclear negotiations between the US and Iran are scheduled for Tuesday in Geneva.

The talks commence with minimal apparent progress toward an agreement, while the US continues to build up its military presence in the Middle East.

Due on Wednesday, the minutes from the Fed's January meeting will be scrutinised by investors for new indications regarding the path of interest rate cuts.

The CME FedWatch Tool indicates market expectations for an interest rate reduction in June.

Gold, which does not offer a yield, typically benefits from a climate of lower interest rates.

Silver plunges 7%

For anyone monitoring precious metals lately, it is unsurprising that silver's price movements were more extreme than gold's.

Silver once again overshot on the downside, dropping below $73 an ounce before stabilising slightly due to modest buying.

Although the current volatility is less severe than a few weeks ago, this observation offers little true consolation.

The silver contract on COMEX last traded 6.6% lower at $72.733 per ounce.

Gold's notoriously volatile counterpart is currently living up to its reputation, displaying significant intraday swings as traders actively probe for defined support and resistance levels.

“That could mean that $70 is retested soon, or that dip buyers come in to take advantage of lower prices once the US reopens,” Morrison said.

“Sentiment remains uncertain and skittish. The bulls are wary of getting burned again, while the bears can’t be sure that the highs are in," the analyst added.

Oil falls amid key negotiations

Oil prices fell as investors awaited two sets of crucial negotiations taking place in Geneva: nuclear talks between Iran and the US, and trilateral peace discussions involving the US, Ukraine, and Russia.

A stronger dollar also weighed on sentiments as oil is priced in the greenback.

Many Asian markets, including mainland China, Hong Kong, Taiwan, South Korea, and Singapore, were closed on Tuesday due to Lunar New Year holidays.

Investors are closely monitoring US-Iran relations, as any escalation or conflict might result in Iran closing the Strait of Hormuz, a vital route that, if blocked, would severely disrupt global oil exports.

“For this reason, market participants in the oil market are likely to be watching the talks in Geneva closely today,” Carsten Fritsch, commodity analyst at Commerzbank AG, said.

Furthermore, Russia-Ukraine peace negotiations are being watched because a resolution could potentially lead to the lifting of sanctions, allowing Russian oil to return to the mainstream market.

Volumes remain thin due to holiday conditions across Asia and the US, and this helped to keep price action contained within February’s range.

Ahead of Tuesday's scheduled discussions, Russia launched an overnight bombardment targeting Ukraine's energy infrastructure.

Concurrently, there are indications that OPEC+ may restart output hikes starting in April, anticipating stronger demand during the summer months.

“Even if production targets are raised from April onwards, production is likely to increase less than agreed,” Fritsch said.

Last year, the actual increase in production was significantly below the level that had been anticipated.

A survey conducted by S&P Global Energy (Platts) revealed that the production volume from OPEC+ nations with output quotas in January was only 1.6 million barrels per day higher than in March 2025, which was the period before the agreed-upon production increase commenced.