Gold (XAU/USD) extends its recovery from the lowest level since January 6, recorded in the previous session, and climbs back above the $4,900 mark during early European trading on Tuesday. A modest pullback in the US Dollar (USD), which retreats from an over one-week high touched on Monday, supports the yellow metal after a sharp two-day sell-off. However, upside momentum may remain limited as US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve (Fed) Chair, combined with stronger-than-expected US ISM Manufacturing PMI data, continues to underpin the greenback.
At the same time, easing geopolitical risks—driven by signs of de-escalation in US-Iran nuclear tensions and the announcement of a US-India trade agreement—have improved overall risk sentiment, potentially capping demand for safe-haven assets like Gold. Additionally, the CME Group’s decision to raise margin requirements on precious metals futures adds another layer of pressure on the bullion market. As a result, traders may prefer to wait for sustained follow-through buying before concluding that the recent corrective drop from the $5,600 region, or last week’s record high, has fully stabilized.
Daily Digest – Market Movers: Gold holds modest gains on softer USD
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US President Donald Trump nominated Kevin Warsh on Friday to succeed Jerome Powell as Federal Reserve Chair in May, subject to Senate approval. Warsh’s reputation as a policy hawk suggests a firm stance if inflation expectations re-emerge.
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Over the weekend, the CME Group announced higher margin requirements for precious metals futures, effective from Monday’s market close. This triggered a second straight session of liquidation, pushing Gold to a four-week low.
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Economic data released Monday showed a notable improvement in US manufacturing activity. The ISM Manufacturing PMI rose to 52.6 in January from 47.9 previously, marking the first expansion in a year.
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Meanwhile, Trump confirmed that the US and India have finalized a trade deal, with immediate steps toward lowering mutual tariffs. In parallel, expectations of renewed US-Iran nuclear talks later this week further lifted investor confidence.
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The US Dollar edges lower on Tuesday, retreating from Monday’s multi-day high and offering mild support to Gold during Asian trading. Nevertheless, prevailing headwinds could limit further upside in the near term.
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Key US labor market data, including the Job Openings and Labor Turnover Survey (JOLTS) for December 2025 and the Nonfarm Payrolls (NFP) report, has been delayed due to a partial US government shutdown, keeping USD price action a primary driver of XAU/USD movements.
