Despite this, Torres adds that Warsh has recently shifted the needle towards Trump’s preference for lowering borrowing costs, a move that the economist notes may well have been instrumental in the president’s selection.
With Warsh having the “strongest chance among the candidates to assume a confrontational posture regarding the White House’s desire for a less restrictive stance”, Torres sees a rallying of the US dollar.
“The ‘Buy America’ trade is back as a result, and the independence bid that drove gold and silver to nosebleed record heights right below US$5,600 and US$122 per ounce early Thursday morning is unraveling, with the precious metals diving to nearly as low as US$4,900 and US$90 only a day later,” writes the economist in his Jan 30 note.
Meanwhile, Rajat Bhattacharya, senior investment strategist at Standard Chartered Bank’s Wealth Solutions (WS) global chief investment office (CIO) opines that this year’s surge in gold and silver reflects escalating geopolitical uncertainty and the emergence of a “new world order”.
See also: Gold plunge deepens as traders unwind ‘crowded’ bets on rally
In a note released prior to Trump’s nomination of Warsh, Bhattacharya says that the president’s indifference to the US dollar’s decline to a four-year low, coupled with heightened fears over US intervention in Iran, have intensified gold’s rally.
He writes: “Although prices appear stretched, raising the risk of a short term reversal, it reinforces gold’s enduring value as a portfolio hedge. Despite persistent geopolitical challenges, we continue to favour a pro-risk stance, supported by strong corporate earnings, especially in the transformative, artificial intelligence (AI)-driven technology sector.”
“Precious metals and safe havens reflect global shifts: This year, gold has surged 25% and silver over 60%, outperforming equities and other major asset classes for a third consecutive year,” notes the strategist. He adds that haven currencies such as the Swiss franc (CHF) and Australian dollar (AUD), which represent major gold exporters have also similarly outperformed.
See also: Gold, silver plunge as reports on Fed nominee boost dollar
At the same time, Bhattacharya sees that technical indicators and investor positioning suggest that the rally in gold and silver “may be overextended”, leading to a near-term pullback, with gold possibly falling towards US$4,700 an ounce.
On this he writes: “This would present opportunities for long-term investors to consider adding exposure on pullbacks; our balanced portfolio holds 6% in gold. Conversely, investors overweight should rebalance into alternative assets to reduce portfolio volatility. Gold remains preferable to silver as the gold-silver ratio approaches its lowest point since 2011. Silver’s surge could also curtail industrial demand and cause increased substitution.”
With regards to medium-term drivers of gold, Bhattacharya notes that gold’s rally has been underpinned by robust demand from emerging markets’ (EM) central banks seeking to diversify away from the US dollar.
“This trend is likely to persist as EM central banks investigate gold-backed digital currencies. Investor demand provided further impetus to gold’s rally last year. Global gold demand surpassed a record 5,000 tonnes in 2025, led by the second-strongest ever rise in gold exchange-traded fund (ETF) holdings and bar and coin purchases accelerating to a 12-year high, the World Gold Council reported this week,” writes Bhattacharya. Despite the demand, gold supply has only grown by 1%, he adds.
Bhattacharya’s colleague at Standard Chartered, investment strategist Anothy Naab remains “structurally bullish” and overweight on gold.
He writes: “We prefer adding gold and silver at key levels of US$4,687 and US$90 respectively. Structurally, we remain overweight on gold, with our foundation balanced portfolio allocating 6% to the precious metal. Investors who are underweight gold should gradually build towards that target through incremental accumulation on weakness. Tactical short-term investors should however remain cautious given the risk of near-term pullbacks.”
Cristopher Forbes, head of Asia and the Middle East at CMC Markets, notes that in the near-term, gold is “more likely” to “trade violently within a high plateau” than collapse, within the key zone of US$4,800 to US$5,000 in the near-term.
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In the longer-term, Forbes writes that the bull case for gold remains intact. He notes that gold’s 13% gain over the past month and 74% rise over the past year has been driven by US dollar weakness, negative real rates, fiscal deficits, and geopolitical risk — from Middle East tensions to tariff threats in the Americas.
He concludes: “Gold can revisit recent highs if the US Fed continues easing while growth and inflation stay uneven. The upside is more conditional now. Hawkish policy under Warsh, a sustained dollar rebound, or fiscal consolidation could cap gains. But if rate cuts proceed alongside persistent inflation and geopolitical shocks, gold remains a strategic hedge.”
As for Barnabas Gan, group chief economist and head of market research at RHB Bank, further US Fed easing should compress US real yields and erode the dollar’s carry advantage, reinforced by policy uncertainty, twin deficits, and ongoing investor diversification away from US dollar assets.
“We remain structurally bearish [on the] US dollar into 2026 and now expect the dollar index to fall toward the 94 handle by end-2026, versus our previous 97 call,” writes Gan.
He continues: “That said, the path lower would face some notable risks in the coming months ahead: if the market has overestimated the pace or depth of US Fed cuts, any ‘hawkish cut’ delivery or upside data surprise could keep the US dollar supported for longer, on top of the already short contracts accumulated among leveraged funds.”
Overall, Gan sees that global risk appetite has moved lower, but remains in “risk-on mode” going into the week of Feb 2 to 7, thanks to concerns surrounding a potential partial US government shutdown. He concludes: “Should the shutdown occur, we pencil in further equity sell-off, weaker greenback, and higher gold prices.”
JP Morgan vice president and global market strategist Yuxuan Tang sees the decline as a “healthy technical correction after what was, frankly, an irrational rally in the days before”. “The move flushed out a lot of speculative positioning,” she says.
“It’s important to keep in mind that prices have simply reverted to where they were two weeks ago. Gold is still up 13% for January. If history can be of reference, the October correction, from 4,400 down to 3,900, was followed by a short period of consolidation before breaking out to the upside, prices recovered and reclaimed their previous highs by December,” adds Tang.
The economist highlights that the nomination of Warsh “does not alter the benign policy environment” for gold, as the chair-elect “isn’t opposed” to policy rate cuts.
“Despite the higher probability of quantitative tightening, a reversal of the ongoing erosion of global fiscal discipline or the debasement narrative remains unlikely. That’s why we expect central banks, institutions, and retail investors to keep seeking gold for reserve diversification, value storage, and risk hedging,” writes Tang.
With this, she has revised her year-end gold target to US$6,150 per ounce, with a range of US$6,000 to US$6,300 per ounce.
She concludes: “The presence of strategic, long-term buyers — think central banks, foundations and endowments — provides a solid floor for gold prices. That’s why our conviction in gold is stronger than in silver. That said, the pickup in two-way volatility since August could persist given increased retail participation."
