Gold and silver prices dropped sharply on Thursday. Gold neared $4,400 per ounce, and silver briefly fell below $74. However, both metals showed some recovery, reflecting short-term market uncertainty. Recently, there has been notable price volatility in gold and silver, indicating an uncertain short-term price outlook. A correction removed references to the expected US Nonfarm Payrolls data from the initial report.

EUR/USD and GBP/USD Trends

EUR/USD hit new lows, aiming for 1.1600, as the US Dollar gained strength from mixed US Nonfarm Payroll data. GBP/USD dropped below 1.3400, facing pressure from the strong US Dollar and approaching its 200-day SMA. Gold peaked around $4,500, benefiting from risk-off sentiment despite the strong dollar. Bitcoin hovered around $90,000 as institutional demand decreased, while Ethereum stayed above $3,000 but faced pressure from ETF outflows. XRP’s retail demand fell, approaching support at the 50-day EMA, with futures Open Interest dropping to $4.15 billion. The US CPI release next week could impact market movements amid geopolitical tensions. The significant price swings suggest uncertainty about the short-term outlook. The mixed US Nonfarm Payrolls report for December 2025 showed the economy added a solid 195,000 jobs but with weak wage growth, leaving markets without a clear direction. This anxiety is reflected in the CBOE Volatility Index (VIX), which has risen above 21. Precious metals are reacting to this uncertainty, with gold’s sharp dip to $4,400 followed by a rally back toward $4,500. This volatility suggests strong underlying demand during dips. Major gold ETFs have seen net inflows of over $1.5 billion in the first week of the year. This environment is ideal for options strategies that benefit from large price swings rather than a specific direction.

Market Expectations and the Fed

The market is scaling back expectations for near-term Federal Reserve rate cuts. Just last month, fed funds futures indicated a nearly 70% chance of a rate cut by March 2026; now that probability has fallen below 40%. This change has been the main driver of the US Dollar’s recent strength. As a result, the stronger dollar is putting pressure on pairs like EUR/USD, which is now looking to drop to 1.1600. Similarly, GBP/USD has dipped below 1.3400 and is challenging its critical 200-day moving average near 1.3380. Traders should carefully consider derivative positions that may benefit from further declines in these currencies in the coming days. All eyes are on next Tuesday’s US Consumer Price Index (CPI) report, which will be a major catalyst. Current market activity resembles the choppy trading seen in late 2024 when being nimble was crucial. A hotter-than-expected inflation report could accelerate the US Dollar’s rise and further harm risk assets. Create your live VT Markets account and start trading now.

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