Gold shed more than 2% on Tuesday as thin holiday trading, a stronger dollar, and easing geopolitical tensions combined to push the metal to a week-low.
Spot gold fell 1.5% to $4,917.90 per ounce by 0800 GMT, having earlier carved out a session low of $4,862—territory not visited since last week. April-delivery U.S. gold futures fared worse, tumbling 2.2% to $4,936.60 per ounce. Silver, never far behind gold in a rout, was not spared either, sinking 2% to $75.05 per ounce after at one point cratering more than 5% during the Asian session.
The immediate culprit, analysts were quick to note, was the near-total absence of major buyers. Markets in mainland China, Hong Kong, Singapore, South Korea, and Taiwan remained shuttered for the Lunar New Year holiday, draining a significant source of liquidity from Asian trading hours.
Compounding the effect, gold had already slid roughly 1% in the prior session, following a brief Friday rally sparked by modest U.S. inflation data that had bolstered the case for Federal Reserve rate cuts. U.S. markets were also closed Monday for Presidents’ Day, compressing participation across both hemispheres simultaneously.
“Thin liquidity with the holidays in the last 24 hours, especially in China and Asia, but also obviously in the United States too, means we just lacked a bid in the market,” said Kyle Rodda, senior market analyst at Capital.com. In the absence of major institutional buyers, even modest selling pressure can exaggerate price moves—and Tuesday was a textbook example.
Some analysts framed the move as an orderly consolidation rather than a structural breakdown, with Hebe Chen of Melbourne’s Vantage Markets describing recent price action as “orderly consolidation and light profit-taking” following the metal’s push back above $5,000 after Friday’s inflation data.
Adding fuel to the selloff, the U.S. dollar index rose 0.3% against a basket of major currencies, tightening the screws on gold priced in greenbacks. A stronger dollar makes dollar-denominated commodities like bullion more expensive for buyers holding other currencies, mechanically suppressing demand.
Mixed signals from the U.S. economy have complicated the Federal Reserve’s rate path, with consumer prices rising less than expected in January while job growth unexpectedly accelerated—a combination that has kept markets guessing over the timing and pace of any easing.
Gold has drawn considerable support in recent months from geopolitical risk, but Tuesday brought little comfort on that front either. U.S. President Donald Trump confirmed he would be “indirectly” involved in U.S.–Iran nuclear talks in Geneva, while Ukrainian and Russian representatives were also set to convene there this week for U.S.-mediated peace discussions. The prospect of diplomatic progress, however tentative, eroded some of gold’s safe-haven premium.
The market’s gaze is now trained firmly on Wednesday, when the Federal Reserve releases the minutes of its January policy meeting—a closely watched document that could either validate or complicate current market expectations. According to CME’s FedWatch Tool, traders are pricing in the first of three anticipated rate cuts for 2026 arriving in June.
“Now it’s going to be interesting to see what these FOMC minutes say in the sense that the markets want many more rate cuts now than what the Fed said that it would do,” said Ilya Spivak, head of global macro at Tastylive.
The tension between market expectations and Fed guidance has been a persistent undercurrent for precious metals this year, given that non-yielding assets like gold tend to thrive when interest rates fall, reducing the opportunity cost of holding bullion over interest-bearing instruments.
The backdrop to Tuesday’s session is one of extraordinary volatility. Gold surged to a record above $5,595 per ounce in late January before a brutal two-day meltdown in early February—its sharpest single-day drop since 1983—sent it crashing back toward $4,400.
The CME had raised margin requirements for gold from 6% to 8% as the market hit those peaks, forcing highly leveraged speculators to either inject capital or liquidate their positions, converting a correction into a rout. Since then, gold has clawed back approximately half those losses.
Despite Tuesday’s turbulence, longer-term bulls retain conviction. Spivak placed the immediate ceiling for gold at around $5,120, with the next major objective being a return to the highs around $5,600—and from there, fresh record territory. Some strategists have set even more ambitious targets, with at least one major firm maintaining a year-end forecast of $6,500 per ounce, citing continued central bank buying and growing institutional interest.
For now, however, the market waits. With Asian liquidity set to return gradually as Lunar New Year celebrations wind down, and with the Fed minutes due to drop Wednesday morning, the coming 48 hours may well determine whether Tuesday’s drop was a passing squall or the beginning of something more unsettling for gold’s hard-fought recovery.
WHAT YOU SHOULD KNOW
Gold’s sharp drop on Tuesday was primarily a liquidity story. With major Asian markets closed for the Lunar New Year and the U.S. still recovering from Presidents’ Day, there simply weren’t enough buyers to support prices.
A stronger dollar and easing geopolitical tensions added to the pressure, pushing spot gold to a week-low of $4,862 per ounce.
The bigger picture, however, remains intact. All eyes are now on Wednesday’s Fed minutes, which could confirm or challenge market expectations of three rate cuts in 2026—a scenario that would be a powerful tailwind for gold.
Despite Tuesday’s turbulence, analysts still see a path back to record highs above $5,600 and beyond. The dip, for many, looks less like a reversal and more like a pause.
