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• The US Dollar cheered Warsh's nomination for Fed chair.
• Precious metals plunged as investors lost interest in debasement trade.

Speculations and the recent nomination of Kevin Warsh to become Fed chair have allowed the US dollar to find its footing. In the past, this former FOMC official has shown himself to be a ‘hawk’. Markets saw his appointment as a reduction in the risks of the central bank losing its independence and returned to fundamentals for a while. The greenback is backed by a strong US economy and a prolonged pause in the cycle of monetary expansion.

The explosive rally of the EUR/USD is beginning to cause discontent at the European Central Bank. Investors recall the speech by Vice-President Luis de Guindos. In 2025, he argued that with the euro at $1.2 and above, the eurozone economy would have a hard time. The head of the Bank of Austria, Martin Kocher, believes that the ECB will be forced to act by cutting rates if the euro continues to strengthen, which damages its inflation plans. His colleague from France, François Villeroy de Galhau, claims that the Governing Council will take Forex events into account when making decisions on interest rates.

Bloomberg experts do not expect the ECB to change them at its meeting on 5 February. Although most still agree that the next step will be a rate hike, fewer of them expect this to happen this year. However, the EUR/USD rally may adjust these forecasts. There are big bets in the currency market that the European Central Bank will return to easing monetary policy. On paper, it has no target for the euro exchange rate, but a strengthening currency will hamper the export-oriented economy.

The strengthening of the US Dollar has allowed the USD/JPY to rise. Investors are asking themselves whether Japan's currency interventions would be effective if it acted alone, without the US. Finance Minister Scott Bessent made it clear that the Americans were not involved.

Kevin Warsh's nomination to Fed chair had a sobering effect on gold. Its collapse from record highs showed the overly speculative nature of the previous rally. It was based on debasement trading, fuelled by mistrust of the White House's policies and the US dollar. However, if the Fed's independence remains intact, the market will begin to ask an uncomfortable question. Has its rally gone too far too fast?

UK PMI Manufacturing was finalized at 51.8 in January, up from December’s 50.6 and marking a 17-month high. The reading signals a solid start to 2026 for the sector, showing resilience despite a challenging backdrop of geopolitical tension and trade uncertainty.

According to Rob Dobson of S&P Global Market Intelligence, growth momentum improved notably. Output and order books expanded at a faster pace, while new export business rose for the first time in four years, led by demand from Europe, China, and the US. Business confidence also rebounded, reaching its highest level since before the 2024 Autumn Budget, as firms focused on opportunities ahead rather than near-term policy and geopolitical risks.

The labor market picture showed tentative stabilization. Although hiring remained weak, the pace of job cuts slowed to its mildest in 15 months. That said, inflation pressures are resurfacing, with higher Minimum Wage and employer National Insurance costs feeding through supply chains alongside rising metals prices, posing a potential constraint on margins in coming months.

Full UK PMI manufacturing final release here.

Eurozone PMI Manufacturing was finalized at 49.5 in January, up from December’s 48.8. According to Cyrus de la Rubia of Hamburg Commercial Bank, progress remains at a "snail’s pace". Order intakes continued to fall, albeit at a less severe pace than late last year, while sentiment twelve months ahead improved slightly, suggesting firms are cautiously more optimistic about future production.

The regional picture remains highly uneven. Greece led with a PMI of 54.2, a five-month high, while France surprised on the upside at 51.2 (a 43-month high). Germany showed tentative stabilization, with contraction easing to a three-month high of 49.1. In contrast, Italy (48.1)remained firmly in contraction, Austria (47.2) deteriorated sharply, and Spain (49.2) slipped into its second consecutive month of decline after previously outperforming peers.

Cost pressures also re-emerged as a key theme. Input price inflation rose noticeably, driven in part by a sharp increase in natural gas prices and firmer oil costs. At the same time, higher prices for industrial metals may reflect strengthening global demand rather than pure supply stress.

Full Eurozone PMI manufacturing final release here.

According to media reports, the silver market has experienced its largest price drop since 1980.

Notably, it is difficult to identify a single powerful fundamental catalyst that could clearly explain the move from the 29 January high near $120 to today’s low around $72 (approximately −40%). The geopolitical backdrop remains tense, with risks related to Iran, Greenland, Ukraine and other regions still very much in play.

The media point to a cascade of long-position liquidations, a view that aligns with the analytical conclusions of our article “For the First Time In History, the Price of Silver Has Exceeded $115”, published five days ago.

At that time, we:

→ reaffirmed the primary ascending channel and highlighted a surge in volatility during the A→B move from the upper boundary of the channel;

→ suggested that “smart money” was using broad market participation to lock in profits on long positions after an extraordinary rally (more than +200% over the past six months). In Wyckoff terms, this corresponded to a distribution phase.

These assumptions were subsequently confirmed by:

→ a brief push above the A high (the UTAD pattern — Upthrust After Distribution);

→ a sharp increase in bearish pressure. As a result, around the turn of the week, XAG/USD decisively broke not only the channel median but also its lower boundary.

Within the framework of Wyckoff methodology, this price action in silver can be interpreted as follows:

→ “smart money” has completed the distribution of long positions and shifted to selling into the market;

→ retail traders’ positions are being liquidated en masse, accelerating the decline.

In other words, following the Distribution phase, the market has entered the Mark-Down phase. The speed and violence of recent price moves — making timely decision-making particularly difficult — further support this interpretation.

Therefore, even if silver attempts a rebound under the current conditions of extreme oversoldness, any recovery is likely to face a strong resistance zone in the $87.5–95 area. This is where bears previously held a clear advantage while breaking the long-term ascending channel.

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Daily Pivots: (S1) 211.07; (P) 211.78; (R1) 212.53; More...

Consolations continues in GBP/JPY and intraday bias stays neutral. Risk will stay on the downside as long as 214.83 holds, even in case of strong recovery. Below 209.61, and sustained break of 55 D EMA (now at 209.27) will argue that it's correcting whole rise from 184.35 and target 38.2% retracement of 184.35 to 214.83 at 203.18.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, break of 205.30 resistance turned support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

Daily Pivots: (S1) 182.78; (P) 183.42; (R1) 184.06; More...

EUR/JPY is staying in consolidations above 181.76 and intraday bias stays neutral. Risk remains on the downside as long as 186.86 holds, in case of strong recovery. Break of 181.76 and sustained trading below 55 D EMA (now at 182.31) should solidify the case that fall from 186.86 medium term top is correcting whole rise from 154.77. Deeper decline should then be seen to 38.2% retracement of 154.77 to 186.86 at 174.60.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and and met 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Considering bearish divergence condition in D MACD, upside could be capped by 186.31 on first attempt. Still, outlook will stay bullish as long as 55 W EMA (now at 173.32) holds, even in case of deep pullback. Sustained break of 186.31 will pave the way to 78.6% projection at 194.88 next.

Daily Pivots: (S1) 0.8655; (P) 0.8663; (R1) 0.8676; More…

Intraday bias in EUR/GBP remains neutral it's still bounded in sideway trading. Risk stays on the downside with 0.8744 resistance intact. Further decline is expected to 0.8631 cluster support (38.2% retracement of 0.8221 to 0.8663 at 0.8618). Decisive break there will carry larger bearish implications and pave the way to 61.8% retracement at 0.8466.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8625) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.6947; (P) 1.7016; (R1) 1.7091; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the upside, firm break of 1.7232 resistance should confirm strong support from 100% projection of 1.8554 to 1.7245 from 1.8160 at 1.6851. Intraday bias will be back to the upside for 1.7466 support and above. However, decisive break of 1.6851 will likely bring downside acceleration to 138.2% projection at 1.6351 next.

In the bigger picture, fall from 1.8554 is seen as correction to up trend from 1.4281 (2022 low). Strong support should be seen from 38.2% retracement of 1.4281 to 1.8554 at 1.6922 to bring rebound. However, risk will stay on the downside as long as 55 D EMA (now at 1.7442) holds. Sustained break of 1.6922 will raise the chance of bearish trend reversal, and target 61.8% retracement at 1.5913.

Daily Pivots: (S1) 0.9144; (P) 0.9160; (R1) 0.9175; More....

EUR/CHF recovered after hitting 161.8% projection of 0.9394 to 0.9268 from 0.9347 at 0.9143 and intraday bias is turned neutral for consolidations. Upside of recovery should be limited by 0.9235 to bring another fall. Decisive break of 0.9143 will extend larger down trend to 261.8% projection at 0.9017.

In the bigger picture, another rejection by 55 W EMA (now at 0.9350) keeps outlook bearish. Downtrend from 1.2004 (2018 high) is still in progress. Firm break of 0.9178 will target 61.8% projection of 1.1149 to 0.9407 from 0.9928 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of recovery.

Key takeaways

• Gold has entered a disorderly liquidation phase: Driven primarily by forced unwinding of leveraged long positions rather than a shift in Fed policy expectations.
• Margin hikes and order flows, not Fed politics, are the real catalyst: CME’s increase in gold and silver futures margin requirements sharply raised capital costs, choking off bullish risk appetite and triggering cascading sell-offs, while US 2-year yields signal no hawkish repricing.
• Near-term setup favours a tactical bounce, with clear risk levels: Gold is approaching the critical US$4,405 support, reinforced by multiple technical confluences and extreme volatility readings; a hold above this level opens scope for a minor mean-reversion rebound, while a break lower signals further downside.

The price actions of Gold (XAU/US) have staged the expected corrective decline on last Friday, 30 January 2026, to hit the second intermediate support at US$4,757 as highlighted.

The yellow precious metal printed an intraday low at US$4,679 and closed the US session at US$4,895 on Friday, 30 January 2026, recording a daily loss of 9%, its steepest drop since 1983.

Order flows are the main catalyst for the steep losses, not Kevin Warsh

Fig. 1: 2-YR US Treasury yield medium-term trend as of 2 Feb 2026 (Source: TradingView)

Several media reports have highlighted that US President Trump’s official announcement to nominate ex-Fed governor Kevin Warsh as the new Fed Chair is likely the driver that triggered the rampant sell-off in gold and silver due to his past remarks on his preference for a smaller US Federal Reserve’s balance sheet, which may lead to an indirect tightening of liquidity conditions.

However, the US Treasury market does not imply such a narrative that “Kevin Warsh is going to be a new hawkish Fed Chair”.

The 2-year US Treasury yield, which is the most sensitive to the Fed’s monetary policy stance, did not trade higher last Friday; instead, it dropped by 4 basis points to close lower at 3.52%, and remained below the medium-term range resistance of 3.63% in place since 30 October 2025 (see Fig. 1).

In today’s Asia session, 2 February 2026, Gold (XAU/USD) has continued to extend its losses by 9% to print an intraday low of US$4.402 at the time of writing due to a hike in metal futures margins announced by CME Group over the weekend.

COMEX gold futures margins (1oz) are raised from 6 per cent to 8 per cent, while COMEX 5000 silver futures (SI) are set to increase to 15 per cent from 11 per cent.

Hence, such increases in margin requirements are likely lead to a further unwinding of speculative long positions in Gold and Silver.

Higher capital outlays to sustain or extend long positions abruptly choked off bullish risk appetite, unleashing a cascading liquidation in Gold (XAU/USD).

Let's now look at the short-term technical chart to decipher the near-term (1 to 3 days) trajectory

Short-term trend (1 to 3 days): Minor mean reversion rebound after overextended decline

Fig. 2: Gold (XAU/USD) minor trend as of 2 Feb 2026 (Source: TradingView)

Watch the US$4,405 key short-term pivotal support on Gold (XAU/USD). A clearance above US$4,742 (also the 20-day moving average) is likely to increase the odds of a minor mean reversion rebound towards the next intermediate resistances at US$4,942 and US$5,169 (also the 61.8% Fibonacci retracement of the steep decline from 26 January 2026 all-time high to 2 February 2026 intraday low) (see Fig. 2).

However, a break and an hourly close below US$4,405 invalidates the minor bullish recovery scenario for a further extension of the corrective decline towards the next intermediate supports at US$4,285 and US$4,129.

Key elements to support the short-term bullish bias

• The US$4,405 key short-term pivotal support is defined by a confluence of different elements that point to a similar level of around US$4,405; the 50-day moving average, the lower boundary of a medium-term ascending channel from 28 October 2025, and a Fibonacci extension of the current drop, measured from the current all-time high of 29 January 2026.
• Hourly Bollinger Bandwidth has spiked to an extreme 15.25, indicating a volatility climax and suggesting the recent price sell-off is overextended in the near term.