Precious metals face downward pressure as the market seeks direction

Thursday, January 8th US morning trading session showed a significant decline in gold and silver prices, dominated by technical adjustments and position closures. February gold futures were trading at $4,431.7 per ounce, down $30.8, while March silver futures were at $73.83 per ounce, with a loss of $3.783.

Technical Factors and Market Behavior

The downward movement was mainly due to short-term traders taking profits and the closing of weak long positions. The technical behavior of silver has caused considerable concern in the markets, with signals of reversal pattern formations on daily charts. Bullish investors in both metals are watching with worry as the upward momentum loses steam.

A crucial aspect of the current outlook is that mature bull markets require a continuous flow of positive catalysts to maintain their trend. In the present context, both metals seem to lack that fundamental support to sustain their recent gains. This situation explains why market participants are reevaluating their strategies.

Rebalancing of indices: a key catalyst

Both traders and investors are preparing for the annual commodity index rebalancing, an event that could trigger massive sell-offs. Citigroup estimates that around $6.8 billion in silver contracts could exit the market in the coming days, with gold fund outflows roughly equivalent. Bloomberg attributes these pressures to the increased weighting of precious metals in benchmark indices.

Favorable macroeconomic context for gold

Paradoxically, US employment data could support long-term prices. According to Challenger, Gray & Christmas, layoffs announced in December reached 35,553, the lowest since July 2024, representing an 8% decrease compared to December of the previous year.

However, the annual outlook reflects a challenging labor market. Throughout 2025, US employers announced a total of 1,206,374 layoffs, a 58% increase compared to 2024 and the highest since 2020. The technology sector led the reductions, with 154,445 layoffs, attributed to the accelerated adoption of artificial intelligence and overhiring in previous years. The government sector reported 308,167 layoffs, mainly at the federal level.

At the same time, announced hiring fell to 507,647, a 34% decrease from 2024 and the lowest level since 2010. This combination suggests a contracting labor market, a factor that historically supports demand for safe-haven assets like gold.

Regulatory uncertainty on tariffs

The US Supreme Court could issue a critical ruling on the legality of tariffs as soon as Friday. President Trump is using the International Emergency Economic Powers Act of 1977 to justify his reciprocal tariffs, but a lower court has already determined that this invocation exceeds his executive authority.

If the Supreme Court invalidates these tariffs, most measures imposed during Trump’s second term could be eliminated, and the government could face reimbursement obligations of tens of billions of dollars. However, five legal alternatives are available to continue tariff policies, although these present greater procedural restrictions.

Defense budget expansion

Trump has proposed increasing annual defense spending by $500 billion, reaching $1.5 trillion. This measure aims to build, in his words, a “dream army” and strengthen national security. Simultaneously, he signed an executive order prohibiting share buybacks and dividends for major defense contractors until they increase investments in infrastructure and R&D, with executive salaries limited to $5 million annually.

The news caused declines in shares of Raytheon Technologies, Northrop Grumman, Lockheed Martin, and General Dynamics.

Venezuelan oil: geopolitical reconfiguration

The Trump administration announced plans to control up to 50 million barrels of Venezuelan oil, representing one of the most significant recent changes in global supply. This strategy involves direct participation of the federal government in international crude markets and could revive Venezuelan exports after years of sanctions.

Venezuela, holder of the world’s largest proven oil reserves, has seen its production fall below one million barrels per day due to lack of investment, sanctions, and economic isolation. Trump stated that the United States “will rebuild the Venezuelan oil industry in a highly profitable way.”

US oil traders are quickly adjusting their positions to secure access to these supplies. However, major oil companies remain cautious without a clear political and legal environment, although some plan to meet with White House officials soon. This situation has already depressed Canadian crude prices and exerted pressure on benchmark futures.

Current external market dynamics

The US dollar index showed slight strengthening, while crude oil is trading around $57.00 per barrel. Ten-year Treasury yields are at 4.16%.

Technical outlook for precious metals futures

Gold (February): Bulls aim to close above the all-time high of $4,584.00 per ounce, while bears target breaking below $4,284.30 per ounce. Immediate resistance is at $4,475.20 per ounce, followed by $4,500.00; primary support is at $4,400.00 per ounce.

Silver (March): The price is debating complex technical formations, with bulls aiming to break $82.67 per ounce. Bears seek to close below $69.225 per ounce, the previous weekly low. Next resistance is at $75.00 per ounce; support is at $74.00 per ounce. Analysts note that the value of an ounce of silver mainly reflects these overlapping technical dynamics with macroeconomic factors.

The precious metals markets operate through two mechanisms: the spot market for immediate delivery and futures for future deliveries. Currently, liquidity and year-end adjustments favor trading nearer-term contracts on the CME (Chicago Mercantile Exchange).