Gold faced significant downward pressure on Thursday, with its spot price falling sharply below the $4,900 per ounce threshold. Market sentiment is turning cautious ahead of scheduled discussions between the United States and Iran, set for Friday. The potential for these negotiations to falter before substantive progress is made is fueling investor anxiety. A core disagreement looms: Iran insists on talks focused solely on its nuclear program, while Washington is pushing for a broader agenda.
Oman Negotiations Begin Under a Cloud
The talks, planned for February 6 in Oman, are already a point of contention. Reports highlighting fundamental disagreements on the topics for discussion leave little room for optimism. Rather than easing geopolitical strains, military posturing and entrenched positions are amplifying market uncertainty, which is typically a supportive environment for the precious metal.
Key Market Movements:
* The spot price for gold declined by 2.26% to $4,852.59.
* A strengthening US dollar made dollar-denominated bullion more expensive for holders of other currencies.
* Silver prices experienced a severe sell-off, ending a two-day recovery phase.
* Extreme price volatility reflects the current nervous trading environment.
Currency Dynamics and Central Bank Watch
A firmer US dollar created an additional headwind for gold. Meanwhile, market participants are also focused on the European Central Bank’s policy meeting held on Thursday. Analysts widely anticipated that interest rates would be held steady at 2.0%, following a drop in Eurozone inflation to 1.7% in January.
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Long-Term Bullish Outlook Endures
Despite short-term turbulence, major financial institutions maintain their positive long-term forecasts for gold. Wells Fargo notably raised its price target for late 2026 on February 4, projecting a range of $6,100 to $6,300 per ounce. Similarly, Deutsche Bank forecasts prices could reach as high as $6,000 within the year.
Ongoing central bank acquisitions continue to provide fundamental support for the market. Global central banks were net buyers of 230 tonnes of gold in the fourth quarter of 2025, an increase from the 218 tonnes purchased in the previous quarter.
The market is currently navigating a volatile period of price discovery after hitting a record high near $5,600 in late January. This week’s extreme swings—from a plunge below $4,500 to a recovery above $5,000 on Wednesday—highlight the prevailing skittishness. In the immediate term, the outcome of the Oman negotiations is likely to set the directional tone for gold.
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