FTSE 100 closes at record high despite gold sell-off
And finally…. the UK’s blue-chip share index has closed at a new all-time high.
The FTSE 100 has ended the session at a fresh peak of 10,341 points tonight, as traders piled into retailers, banks, airlines and hospitality firms.
The Footsie earlier touched a new intraday high of 10,345 points, as traders brushed off concerns about the selloff in precious metals, oil and crypto assets.
JD Sports (+6%) was the top riser on the FTSE 100, followed by Intercontinental Hotels (+4.1%).
Airline group IAG (+3.6%) benefitted from the drop in the oil price today, while AstraZeneca (+3.2%) after its shares also began trading in New York for the first time today.
Stocks gained despite the weakening precious metals prices – gold is down 3.8% today at $4,676 an ounce, and silver is down 6.8% at $79 an ounce.
That hit bullion producer Endeavour Mining (-2.6%), who were the top faller.
Fawad Razaqzada, market analyst at City Index, says gold has experienced a “brutal correction”, after soaring in recent weeks.
“The gold forecast has shifted dramatically over the past few sessions. After racing to fresh all-time highs last week, gold suffered a violent reversal towards the end of last week. That volatility carried through to today’s session, with prices plunging by almost 10% at one point before finding some tentative support. While both gold and silver managed to bounce off their lows once European trading got underway this morning, the damage has clearly been done from a technical perspective.”
“From a macro perspective, several of the key drivers that pushed gold higher are now starting to fade. One of the biggest bullish themes had been concerns about US monetary policy credibility, especially with political pressure on the Federal Reserve and persistent calls for rate cuts.”
“The next big test for the gold forecast will come from US macro data. This week is packed with key releases, including ISM surveys, JOLTS job openings and, most importantly, Friday’s US non-farm payrolls report. Ahead of those, we saw the ISM manufacturing PMI data come in stronger, showing US manufacturing activity expanded at the fastest pace since 2022. This kept the dollar on the front foot.”
Goodnight. GW
Britain’s share index of medium-sized companies, the FTSE 250, has also had a solid day.
The FTSE 250 index is up 100 points, or 0.43%, at 23,353 points in late trading, led by cruise operator Carnival (+7.5%).
Updated
Encouragingly, European stock markets are also rallying this afternoon.
Despite earlier anxiety about the dorp in precious metals prices, Germany’s DAX is up 1% with France’s CAC 0.7% higher and Italy’s FTSE MIB gaining 1.1%.
350 job cuts at GSK
Drugs giant GSK is cutting up to 350 research & development jobs across the UK and US as part of an overhaul of the division.
The cuts are a result of a process started following the spin-off of its consumer health business Haleon in mid-2022, to bring together medicine and vaccine development.
Around 50 jobs will go at GSK’s main research centre in Stevenage, staff have been told, but there will probably be more job losses in the UK, along with cuts in the US in the next couple of months. GSK employs a total of 12,000 people in R&D globally.
A GSK spokesperson said:
“GSK R&D investment has risen by almost 90% over recent years (to £6.4bn in 2024) and we expect it to increase further as we focus on delivering our pipeline of new medicines with multi-blockbuster potential before 2031.
As we increase investment, we’re focused on allocating resources to these priorities and making sure we have the right people in the right teams. Alongside this, we’re investing in technology to maximise our scientific capabilities and drive productivity, and in our key R&D sites over the next five years to accelerate drug discovery and research.”
Updated
The pound has slipped to a one-week low against the US dollar.
Stering is down almost half a cent now at $1.365, the lowest since last Monday.
Capital Economics: rates may not fall as fast if Starmer or Reeves replaced
UK interest rates might be cut three times this year, analysts at Capital Economics suggests – unless Keir Starmer or Rachel Reeves are bundled out of Downing Street and replaced by a less fiscally-responsible PM or chancellor.
In a new note, their UK economist Alex Kerr says:
The data published since the start of the year suggest economic activity and price pressures have strengthened. But we still expect annual GDP growth to slow and the weak labour market to weigh on price pressures. This and the smaller rises in regulated prices this year than in 2025 mean we think CPI inflation will fall below the 2.0% target this year and stay there.
That will allow the Bank of England to cut interest rates from 3.75% now to 3.00% this year, rather than to 3.50% as investors anticipate. That said, if Starmer and/or Reeves were to be replaced by a top team in favour of higher public spending then interest rates may not fall as far.
Encouraging news from the US economy!
America’s factory sector picked up last month, according to two polls of manufacturing purchasing managers.
S&P Global’s PMI survey has found there was a “notable upturn in production” despite subdued sales growth in January. It found that production rose last month at the joint-fastest pace since May 2022.
A rival PMI survey from the Institute of Supply Management also shows that economic activity in the US manufacturing sector expanded in January for the first time in 12 months, with new orders and production growth both rising.
Britain’s FTSE 100 share index is putting on another spurt.
It’s now climbed over the 10,300-point mark for the first time, hitting 10,337 points – up over 1% today.
Wall Street opens flattish as dollar rallies
Ding ding goes the opening bell on the New York stock exchange, as Wall Street opens softly as the metals selloff eases.
The S&P 500 share index, which tracks five hundred US companies, is flat in early trading – shrugging off fears of a loss earlier today.
The Dow Jones industrial average has gained 0.25%, or 115 points, to 49,007.93.
And the US dollar is now up 0.55% as traders react to the prospect of Kevin Warsh running the Federal Reserve.
Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury, suggests the bounce may have further to run:
“The appointment of Kevin Warsh as the next chair of the Federal Reserve seems to have helped stop the rot for the dollar.
“While Warsh has recently aligned himself with Trump in calling for a lower fed funds rate, the fact that he was previously seen as a hawk during his stint as a Fed governor in the late-noughties means that he is probably less likely to advocate for aggressive cuts than messrs Hassett and Reider.
“His appointment may also act to calm fears over Fed independence, given that he has been a vocal advocate of preserving central bank autonomy in the past. Of course, any pick by the president will be regarded as a Trump loyalist to some extent, but we certainly view the Warsh appointment as the lesser of three evils.
Updated
Good news – possibly – for chocolate lovers.
The wholesale price of cocoa has fallen around 5%, with Bloomberg reporting that cocoa futures are the lowest level since November 2023.
They report:
The most-active contract fell as much as 5.4% to trade below $4,000 before paring losses. Futures are down more than 30% this year on worries over demand destruction and the potential for a bigger-than-expected surplus.
If that’s passed onto consumers, then there could be relief for shoppers after chocolate prices surged last year:
Disney has beating forecasts in its latest financial results.
The entertainment company was helped by a strong quarter in its parks business, which pulled in record quarterly revenue of $10bn, with attendance at Disney’s domestic parks up 1% in the quarter, and per capita spending up 4%.
This helped Disney to post a 5% rise in total revenues to $26bn, and adjusted earnings per share of $1.63 for the quarter, topping forecasts for $1.56. But…. total operating income for the company dipped to $4.6bn, from $5.1bn a year ago.
Bob Iger, chief executive officer of The Walt Disney Company, says:
“We are pleased with the start to our fiscal year, and our achievements reflect the tremendous progress we’ve made.
We delivered strong box office performance in calendar year 2025 with billion-dollar hits like Zootopia 2 and Avatar: Fire and Ash, franchises that generate value across many of our businesses. As we continue to manage our company for the future, I am incredibly proud of all that we’ve accomplished over the past three years.”
Updated
One asset that isn’t recovering its earlier losses is oil, as fears of a US attack on Iran ease.
Brent crude is still down almost 5% today, currently trading at $65.95 a barrel.
Charalampos Pissouros, senior market analyst at Trading Point, says:
Oil prices opened with a negative gap today and slipped around 5% after the opening as US President Trump said over the weekend that Iran and Washington are in serious talks, which likely lessens the risk of the US proceeding with military action.
Gold and silver prices recovering as 'metals meltdown' eases
The meltdown in the metal market has eased, as City traders grab some lunch.
Gold, which was down almost 10% this morning, is now only down 1.6% today at $4,790 per ounce.
And silver, after a 15% tumble early on Monday, is also down just 1.4% now at $83 per ounce.
Traders may be recovering some confidence, after worries over the nomination of Kevin Warsh to run the US Federal Reserve hit markets.
David Morrison, senior market analyst at fintech and financial services provider Trade Nation, says:
Overall, there’s been quite an uptick in FX volatility of late. This suggests a relatively high level of uncertainty amongst investors. And this in turn could be a precursor to a major change in trend.
There are some mixed views concerning President Trump’s pick as the next Fed Chair, Kevin Warsh. Some look back at his past behaviour and insist that he’s a hawk. They point to when he was a Fed governor during the Great Financial Crisis and how he wanted to raise rates to stem inflationary pressures. But that was eight years ago, and the simple fact is that the President wouldn’t have picked Mr Warsh if he had a wildly different from him over monetary policy.
Mr Warsh will be happy to cut rates. But he is dead against quantitative easing. He also wants to make fundamental changes at the US central bank and boost transparency. All-in-all, he should be someone with whom the markets can deal quite happily.
FTSE 100 hits fresh record high as metal prices recover
Oof! Britain’s stock market has now shrugged off its earlier worries, and hit a new alltime high.
With the slump in metal prices easing, the FTSE 100 has bounded ahead to hit a fresh record peak of 10,298 points, up 0.7% today.
Mining companies have recovered most of their earlier losses, helped by a moderate recovery in precious metal prices after their tumble early this morning.
Deutsche Bank have crunched the data of how markets performed in January – and spotted a surprising feature.
Despite an array of risks around Venezuela, Iran, Greenland and Fed independence, nearly every major asset was still in positive territory, when measures in US dollars anyway.
Silver led the way, followed by oil and then gold.
Bitcoin, and the dollar itself, were rare stragglers last month.
Deutsche Bank say:
Equities did well across the board, as positive data surprises continued to power risk assets. Indeed, the ISM services index hit a 14-month high, whilst the US jobs report showed unemployment ticking lower. In turn, the S&P 500 (+1.4% in total return terms) briefly poked above 7,000 for the first time, whilst the MSCI EM index (+8.9%) had its best monthly performance since November 2022.
Most notably, it was a historic and extraordinary month for precious metals, even with the late pullback. In fact, gold (+13.3%) saw its best monthly performance since September 1999, and silver (+18.9%) posted a 9th consecutive monthly gain.
Other commodities did very well, and the geopolitical risk pushed Brent crude oil (+16.2%) to $70.69/bbl, marking its biggest monthly jump in four years.
Bitcoin was one of the few major assets to end the month lower, down -10.8% to $78,197. That’s a 4th consecutive monthly decline for Bitcoin, which hasn’t happened since before the pandemic.
The US Dollar also struggled, particularly after Trump was asked about the decline, and he said “No, I think it’s great”. So the US Dollar weakened against every other G10 currency, and the dollar index also saw its worst 4-day slide since the Liberation Day turmoil last April.
The turmoil in the precious metals market has left traders in China nursing losses, with one dealer reportedly fleeing the country.
Bloomberg are reporting that Chinese metals traders have racked up losses totaling at least 1 billion yuan (£105m), and that Xu Maohua, a metals dealer known as “The Hat” has scarpered.
At the heart of the crisis is a trading network facilitated by Xu Maohua, a metals dealer nicknamed The Hat, said the people, including some who worked with or did business with him and are directly affected by the losses. State-backed SDIC Commodities Co. was the highest-profile participant, they added, asking not to be named given the sensitivity of the matter.
Xu owed money to the company for shipments of copper and other metals, and it in turn owed money to its suppliers, the people said. The fallout includes one lawsuit against SDIC Commodities filed for over 200 million yuan in damages and bills that the plaintiff claims have gone unpaid, according to an exchange filing from a company involved. The firm has not publicly responded.
Exclusive: Metals traders face at least 1 billion yuan ($144 million) of losses after a dealer known as 'The Hat' fled China, alarming top regulators https://t.co/aW6kAQUH8h
— Bloomberg (@business) February 2, 2026
Waitrose: Damp January is the new Dry January
Waitrose have reported that Dry January was not so dry after all, my colleague Julia Kollewe writes.
“Move over Blue Monday, it’s all about ‘Damp Monday’,” quipped the upmarket grocer, which is part of the John Lewis Partnership.
This year, the January slump ended early on Monday 12 January, when shoppers started adding more wines, beers and spirits back into their baskets, with sales up 11% compared to the week before.
Waitrose said it was seeing a significant softening of the Dry January trend. In January 2022, alcohol sales were 42% lower on average than the other months of the year, while this January, the reduction was much smaller, around 25%.
The company sold 25% more Argentinian wine and 27% more Chilean wine compared to this time last year.
While 58% of the UK public intended to cut back on booze, roughly 31% opted for a “Damp January” - reducing intake rather than cutting it out entirely, Waitrose said, citing figures from trade mag The Spirits Business.
Pierpaolo Petrassi, head of beers, wines & spirit at Waitrose, said:
“Damp is the new dry, as we’re seeing customers move away from the ‘all-or-nothing’ mentality and instead look towards more mindful, ‘damp’ moderation rather than quit entirely.
“No doubt the no and low trend skyrocketed in 2022 as the result of the ‘pandemic reset’ transitioning out of the final lockdowns, as well as the ‘sober curious’ movement going mainstream on social media. Now, 2026 is the ‘lifestyle’ year, with customers finding balance as part of a more tempered, year-round approach to drinking.”
Updated
The “pullback” in the gold price today looks more like a liquidity event than a change in the long-term case for holding bullion, argues John Wyn-Evans, head of market analysis at Rathbones.
Wyn-Evans says the sharp reversal in gold’s momentum was helped along by President Trump’s decision to nominate Kevin Warsh as the next Fed chair on Friday, which prompted a rise in the US dollar.
He writes:
“Not for the first time in recent market history, we’re witnessing a spectacular unwinding of leveraged positions, this time in precious metals.
“The sharp pullback in gold looks more like a liquidity and positioning event than a change in the long‑term case for the asset. After a powerful run‑up driven by momentum strategies, short squeezes and leveraged buying, that same positioning has unwound rapidly, amplifying downside moves. Reports of unsettled trades in parts of the metals market have added to near‑term pressure, but, in our view, this reflects stress among specific market participants rather than systemic weakness across precious metals.
The FTSE 100 is benefitting from its holding of ‘defensive’ companies today.
Unilever (2%), catering firm Compass (+1.9%), and insurers Beazley (+2.7%) and Aviva (+2.1%) are all in the top risers.
FTSE 100 now up on the day
The UK’s main stock market index has now pushed higher, helped by the minor recovery in gold and silver off their lows.
The FTSE 100 is now up 29 points or 0.28% at 10,252 points.
Full story: Plunge in price of gold and silver rattles global stock markets
Precious metal prices update
Precious metal prices are stemming some of their earlier losses.
Gold is currently down almost 4% today at $4,672 an ounce, adding to the heavy losses on Friday (but better than its 8% drop at one point this morning)
Silver’s 4.5% lower today (having been down over 13% earlier) at around $81/oz.
Today’s selloff has been partly blamed on top commodity exchange CME Group’s decision to raise margin requirements following the collapse in metals prices last week.
Updated
This morning’s pick-up in UK factory growth is the latest in a series of encouraging economic data.
The EY Item Club have upgraded their forecast for growth in 2026 to 0.9%, up from the 0.8% forecast in November – they point to signs that activity picked up at the end of 2025.
However, business investment is now set to contract (by 0.2%) this year, as “global uncertainty and trade disruption cause firms to postpone investment decisions”.
VIX index highest in nearly two weeks.
Wall Street’s ‘fear index’ has hit a near two-week high today.
The CBOE market volatility index, the Vix, is up 9.6% at 19.1 points. That’s the highest since 20 January, when concerns over Donald Trump’s designs on Greenland were worrying investors.
UK manufacturing accelerates: what the experts say
Martin Beck, chief economist at WPI Strategy, says the restart of activity at JLR’s factories after last year’s cyber attack boosted manufacturing in January:
“January’s UK manufacturing PMI offered a tentative note of optimism, rising to a 17-month high of 51.8, up from 50.6 in December. The output sub-index improved more modestly, reaching the joint highest since September, while export orders moved into expansionary territory for the first time in four years.
“Part of January’s improvement may reflect Jaguar Land Rover’s restart of production in late-2025 following last year’s cyber-attack, which is likely continuing to provide some temporary support to the headline PMI. And historically, the link between PMI surveys and official data has been imperfect, so a stronger performance from the former may not necessarily be reflected in the latter.
“Even so, the latest survey reinforces our above-consensus view on near-term UK growth. Despite ongoing concerns around geopolitics and rising business costs, confidence among manufacturers improved markedly at the start of the year, suggesting firms are seeing the outlook as less bleak than at any time since before the autumn 2024 Budget.
Richard Powell, partner at MHA warns that costs are rising:
“January’s PMI figures reflect a sector that is seeing light at the end of the tunnel. The PMI has risen for the fourth consecutive month, suggesting that it is turning a corner. However, there are still signs that it is weighed down by uncertainty, particularly around the geopolitical arena, which continues to play on manufacturers’ minds. That uncertainty may already be denting sales, though if the index holds in the low 50s it remains a broadly positive signal for the start of the year.
We saw momentum building towards the end of last year, and there is underlying optimism across the sector. But manufacturers are clear: they need stability and confidence to invest. Rising energy costs and upward pressure on employment bills show no sign of easing, and the incoming Employment Rights Bill risks adding further regulation and red tape at a time when businesses are asking for support, not additional burden.
Fhaheen Khan, senior economist at manufacturing body Make UK, fears that 2026 will be “one of the most expensive years ever to run a business in the UK”:
“Manufacturing activity is finally moving at a pace deemed worthy of its optimism, taking advantage of the much needed stability in the policy environment since the Budget. Until recently, many businesses had paused investment due to cost uncertainty, though it is unfortunate that cost cutting measures are favouring job losses which will lead to a new headache for the Government.
“Make no mistake this will be one of the most expensive years ever to run a business in the UK. Manufacturers must still navigate the rising cost of labour, high energy prices and trade uncertainty whilst facing pressures to raise wages even in a loosening labour market. While certainty in the policy environment can improve demand conditions and aid business recovery, just so long as businesses are able to get on with their day to day there remains grounds for optimism. It remains imperative for Government to deliver a successful industrial strategy which can support output expansion and, whilst we know the intent is there, without material, bold and decisive action our ambitions for economic growth will not be realised.”
UK factory growth hits 17-month high
Breaking: the UK manufacturing sector is growing at its fastest pace in almost 18 months, in a boost to chancellor Rachel Reeves.
Data firm S&P Global has reported that its Manufacturing PMI, which tracks activity in the sector, rose to a 17-month high of 51.8 in January (anything over 50 shows growth).
Purchasing managers reported that new export orders rose for the first time in four years, with business optimism at its highest level since before Reeves’s first budgest in autumn 2024.
Output and new export business all increased too, with reports of higher sales volumes to Europe, the US, China and several emerging markets.
Companies also reported a small acceleration in their input costs, partly due to rising costs of raw materials such as metals (so today’s tumble in copper, tin and zinc might be a relief!). The prices of energy, food products, freight, packaging and plastics were all reported as rising in price too..
Rob Dobson, director at S&P Global Market Intelligence, says:
“UK manufacturing made a solid start to 2026, showing encouraging resilience in the face of rising geopolitical tensions. Rates of output and order book growth accelerated, while new export business rose for the first time in four years, with Europe, China and the US the main recipients.
There was also a positive bounceback in business confidence, which rose to its highest level since before the 2024 Autumn budget, as manufacturers focussed on opportunities lying ahead despite persistent concerns about the geopolitical environment, Government policy and tariff tensions.
There was also encouraging news on the jobs front. Although the strongest rise in new business for almost four years was insufficient to fully quell reductions to staff headcounts, the rate of cutting slowed to its weakest since job losses started 15 months ago.
Cost pressures are creeping higher though, as the pass through of the increased Minimum Wage and employer NI contributions continue to work through the supply chain alongside the rising costs for commodities such as metals.
Updated
Today’s market mayhem is an uncomfortable backdrop for the Bank of England to be setting interest rates.
The BoE’s monetary policy commitee is due to set borrowing costs at noon on Thursday, with the City expecting them to hold Bank Rate at 3.75%.
Goldman Sachs analysts James Moberly and Sven Jari Stehn predict a 7-2 split, with policymakers Swati Dhingra and Alan Taylor voting for a cut.
They told clients:
Looking ahead, we continue to think that weaker labour market data will push the MPC to cut in March, June, and September to a 3% terminal rate, close to our estimate of the neutral rate but below market pricing. That said, uncertainty around the timing of cuts is high, and firmer data would likely result in a more drawn-out easing cycle.
Eurozone manufacturing improving 'at a snail's pace'
New data shows the eurozone manufacturing sector shrank last month, despite a pick-up in output.
S&P Global’s monthly poll of purchasing managers has found that new factory orders fell in January, as firms reduced their buying quantities and continued to cut jobs.
This left the HCOB eurozone manufacturing PMI at 49.5, up from December’s 48.8, but still below the 50-point mark showing stagnation.
The HCOB eurozone manufacturing PMI output index rose to a three-month high of 50.5.
Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says there are some encouraging signs from Greece, France, and Germany:
“Some progress can be seen in the manufacturing sector, but it’s happening at a snail’s pace. After dropping in December, production ticked up slightly at the start of the year, essentially continuing the growth path we saw between spring and fall last year.
Order intakes haven’t been much help, though — they fell again, even if not quite as sharply as at the end of last year. Right now, it’s hard to say what might put an end to the ongoing rundown of inventories, which makes a strong shortterm upswing rather unlikely.
Still, when looking twelve months ahead, companies are feeling a bit more upbeat than last month about expanding their production.”
Scaramucci: market has decided that Warsh is Volcker
Financial Anthony Scaramucci believes the market selloff is triggered by the choice of Kevin Warsh to run the Federal Reserve (confirmation by the Senate notwithstanding).
Scaramucci, who briefly served as Donald Trump’s White House communications director in 2017, has posted that “The market has decided that Kevin Warsh is Paul Volcker”.
That’s a reference to the hawkish Fed chair of the 1980s who hiked interest rates to tame inflation.
The market has decided that Kevin Warsh is Paul Volcker.
— Anthony Scaramucci (@Scaramucci) February 2, 2026
Actually, Warsh’s problem may be that he pushes for lower rates (as demanded by the White House) but finds that other the Fed policymakers won’t pay ball….
An update to this chart
— Sonu Varghese (@sonusvarghese) February 1, 2026
Warsh will likely advocate for rates (probably why he got the job) but the rest of the Fed may not play along https://t.co/Vcu8TMcon1 pic.twitter.com/xiRFYEWA7A
Stocks on Wall Street are set to slide when trading begins in five and a half hours time.
The S&P 500 share index is down 0.7% in the futures maret, while Dow Jones industrial average futures are 0.4% lower.
The tech-focused Nasdaq is on track for a 1% fall.
Susannah Streeter, chief investment strategist at Wealth Club, says:
Investors are digesting Trump’s appointment of Kevin Warsh and expectations of a slightly more hawkish attitude from him compared to the other candidates who had been under consideration.
Although interest rate cuts are still expected this year, if there’s a sharp return of inflationary pressures, the Fed looks more likely to hold. A higher interest rate environment can depress the value of future earnings and dent the allure of tech stocks.
Concerns about AI demand holding up are also still swirling, which continue to put some pressure on high valuations.’’
Government bond prices are strengthening, a little, as investors ditch riskier assets today.
This has nudged down the yield (or interest rate) on 10-year UK bonds to 4.504%, a drop of 2 basis points (0.02 percentage points).
Two and five-year UK gilt prices are also higher, pushing their yields lower.
US Treasury bond prices are also strengthening, pushing down borrowing costs on that side of the Atlantic (yields fall when prices rise).
MUFG: dollar debasement fears ease after Trump picks Warsh
Easing of “debasement” fears are helping the US dollar to rebound, says Lee Hardman, currency analyst at Japanese bank MUFG.
The “debasement trade” had been pushing up gold, silver and bitcoin for months – but the choice of Kevin Warsh is undermining it.
Hardman told clients this morning:
The US dollar has continued to rebound during the Asian trading session after it was confirmed at the end of last week that President Trump will nominate former Fed Governor Kevin Warsh to be the next Fed Chair.
It has triggered a partial reversal of the US dollar sell-off at the start of this year triggered by heightened US policy uncertainty. The dollar index has risen back above the 97.000-level overnight moving further above the low of 95.551 recorded on 27th January.
The worst performing G10 currencies overnight have been the Australian and New Zealand dollars and the Norwegian krone. Weakness in those currencies has been reinforced by the sharp correction lower in commodity prices particularly in precious metals
How did Trump’s decision to nominate Kevin Warsh as Fed chair spark the selloff in metals prices since Friday?
The key is that the US dollar strengthened, having weakened for weeks as investors anticipated a more dovish choice who could be relied on to cut interest rates as Trump demands.
As precious metals are priced in dollars, that pushed prices down – triggering losses on leveraged bets that gold and silver would keep rising.
Lale Akoner, global market analyst at eToro, explains:
“Gold fell nearly 20% from its peak in two sessions, while silver erased all year-to-date gains, including a historic 16% intraday decline. The selloff reflects an unwind of crowded positioning, not a shift in fundamentals.
“The rally had become over-owned through bullion ETFs, leveraged futures and call-option structures that mechanically amplified upside. News that Kevin Warsh could be nominated as Fed Chair strengthened the dollar and shifted policy expectations, triggering forced selling as liquidity thinned.
“We think that fundamentals remain intact. Central banks continue to anchor demand, with roughly 800 tonnes of buying expected in 2026, increasingly targeted in tonnes rather than value, making demand price-inelastic. Investor and central-bank demand averaged around 750 tonnes per quarter in 2025, well above the ~380 tonnes historically required to support higher prices. Even with some moderation, expected 2026 demand remains comfortably supportive.
The slump in precious metals prices is good news for jewellery makers, at least.
Shares in Pandora – which makes earrings, bracelets, necklesses and rings – have jumped by 9% this morning
Short miners/long jewellers seems to be the 'trade du jour'
— Michael Brown (@MrMBrown) February 2, 2026
*FRESNILLO SHARES FALL 8.5% AS PRECIOUS-METAL PRICES PLUNGE
*PANDORA JUMPS 8.1% AS SILVER PRICE EXTENDS FALL
Saxo: historic rout in silver
The slump in silver prices was triggered by Donald Trump’s choice of Kevin Warsh to be the next chair of the Federal Reserve, says the strategy team at Saxo.
They add that this then triggered losses on futures contracts, which led to further selling – with silver tumblinng around 28% on Friday.
Saxo say:
A historic rally across precious metals turned into an equally historic rout on Friday, extending into Monday’s session as traders continued to unwind what had become an extremely crowded, one-sided trade.
Silver in particular had, for months, drawn in investors, professionals, and retail participants alike, before the move turned parabolic and increasingly unhinged. That dynamic ultimately set the stage for a sharp correction, as the exit doors proved too narrow to absorb a sudden wave of forced selling. While the initial trigger was the nomination of Kevin Warsh, which helped spark a rebound in the dollar, the depth of the slump was driven by a cascade of futures selling linked to the unwinding of ETF and options positions. The risk of second- and third-round selling remains elevated, particularly with Shanghai — the main engine of recent support — seeing sharp losses, and silver futures currently limit-down and not trading.
Speaking of seas of red….
Markets in Asia are getting shredded on Monday. Indonesia and Korea down over 5% each; commodities tossed out the window pic.twitter.com/j4p6urVQHi
— David Ingles (@DavidInglesTV) February 2, 2026
Markets in Asia are getting shredded on Monday. Indonesia and Korea down over 5% each; commodities tossed out the window pic.twitter.com/j4p6urVQHi
— David Ingles (@DavidInglesTV) February 2, 2026
Mining stocks tumble in London
The UK stock market is indeed falling at the start of trading, as predicted.
The FTSE 100 share index has dropped by 58 points, or 0.57% at the open to 10,167 points.
Precious metals producer Endeavour Mining has plunged by 11%, following the slump in the gold and silver price today, followed by Fresnillo (-7%).
Mining stocks are also among the top fallers, including Antofagasta (-5.3%), Glencore (-3.7%), and Anglo American (-3%).
Oil companies are also sliding, tracking the drop in crude prices overnight – BP and Shell are both down over 2%.
Updated
FTSE 100 expected to fall
The UK stock market is expected to fall when trading begins in under 15 minutes.
The FTSE 100 is on track for a 0.6% drop, according to IG’s futures market.
Derren Nathan, head of equity research at Hargreaves Lansdown, reports:
“The FTSE 100 is set to start Monday in the red. Mining stocks are likely to feel the heat as metal prices scramble to find a floor. Oil prices are also trending the wrong way for investors in commodity focussed companies. The silver bubble well and truly popped on Friday after lenders upped their margin calls to speculators. That followed Donald Trump’s nomination of Kevin Warsh, one of the more hawkish contenders in the race, for the top job at the Federal Reserve bank.
There’s no sign of a silver lining this morning either, with another double-digit decline showing on traders’ screens. Gold is following a similar but far less pronounced pattern. In industrial metals, Copper has also seen a flight of speculative funds, although here, the long-term demand runway combined with limited new production set to come on stream should provide some support
Updated
UK house prices up 1% year-on-year
UK house prices have also fallen – although it’s a better picture if you adjust for seasonal factors.
The average price of a UK property fell in January, to £270,873, down from £271,068 in December, according to Nationwide Building Society.
But thanks to the magic of seasonally-adjusted data, that’s actually a 0.3% month-on-month rise. On an annual basis, prices were 1% higher than in January 2025 too.
Nationwide reports that “continued improvement in affordability” helped drive first-time buyer activity last year.
Robert Gardner, Nationwide’s chief economist, says:
“The start of 2026 saw a slight pick-up in annual house price growth, which rose to 1.0% in January, after slowing to 0.6% in December. Prices increased by 0.3% month on month in January, after taking account of seasonal effects.
“Housing market activity also dipped at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget. Nevertheless, the number of mortgages approved for house purchase remained close to the levels prevailing before the pandemic.
“Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year (and explored further below) is maintained.
According to @AskNationwide house prices limped forward in January 0.3% after taking a -0.4% tumble in December. First time buyers are pressing ahead buoyed by improved affordability off the back of reduced interest rates and wage rises, making up to close to 55% of… pic.twitter.com/ecBgUipa1G
— Emma Fildes (@emmafildes) February 2, 2026
Updated
Deutsche Bank are sticking with their forecast that gold could hit $6,000 an ounce this year.
Despite Friday’s tumble – which is continuing today – research analyst Michael Hsueh gives three reasons why:
We argue that the adjustment in precious metal prices overshot the significance of its ostensible catalysts. Moreover, investor intentions in precious (official, institutional, individual) have not likely changed for the worse as of yet.
Gold’s thematic drivers remain positive and we believe investors’ rationale for gold (and precious) allocations will not have changed. The conditions do not appear primed for a sustained reversal in gold prices, and we draw some contrasts between today’s circumstance and the context for gold’s weakness in the 1980s and 2013.
We see signs that China has been a prominent driver of precious metal investment flows. Thus, the rise in SGE premiums late last week is an important sign of amplified buying interest in gold. Together these suggest the rationale for a positive outlook has not changed from that described last week
IG: extraordinary brutal sessions push gold into bear market
Gold has plunged into a bear market, reports IG analyst Tony Sycamore.
Sycamore explains:
Gold is diving sharply once again as European markets open, hitting a fresh intraday low of $4402. That is ~10% below Friday’s close of $4895 and $1200 (~ 21%) below last week’s record high of $5602.
In just three brutal sessions, gold has officially flipped from a raging bull market into a bear market according to the technical definition (a drop of 20% or more from recent highs). This kind of velocity and magnitude is extraordinary, even in a year that’s already seen parabolic gains and extreme volatility.
Silver, meanwhile, has dipped marginally below Friday’s low of $73.30 to a low of $71.31 (-15.58% on the day).
The scale of the unwind unfolding in gold today is something I haven’t witnessed since the dark days of the 2008 Global Financial Crisis—leveraged positions getting flushed, stop cascades, and panic selling reminiscent of those chaotic periods.
Updated
Asia-Pacific stock markets are a sea of red today, as share prices are hit by market volatility.
Japan’s Nikkei 225 stock index has lost 1.25%, while China’s CSI 300 is down over 2%.
But the real drama was in South Korea, where the KOSPI index has plunged by over 5%, which CNBC says prompted authorities to temporarily halt trading, according to an official note.
Copper, tin and zinc are also being hammered by traders today.
Copper futures prices in Shanghai have fallen by more than 9% today.
Tin prices plunged by 11% in Shanghai too, while in London, zinc prices are down over 4%.
Platinum has slumped by 10% this morning to $1,945 an ounce – last week it hit a record $2,918/oz, before plunging on Friday.
US dollar rallying
The US dollar is strengthening against some rival currencies today.
It’s jumped by 1% against the Norwegian crown, and is also up 0.65% against the Australian dollar – and 0.35% against the Canadian currency.
This looks like a response to Donald Trump’s choice for the next head of America’s central bank.
Ipek Ozkardeskaya, senior analyst at Swissquote, says:
The US dollar has been better bid since Friday, with the dollar index rebounding around 1% off four-year lows following news that the Federal Reserve may have a new Chair.
Kevin Warsh was chosen to be the next Fed President and will replace Jerome Powell if confirmed.
Oil falls 5%
Oil is also sliding, on hopes that the US-Iran crisis is cooling.
Brent crude is down over 5% at $65.78 a barrel, which Reuters has spotted would be the steepest single-session decline in more than 6 months.
The move comes after Donald Trump said Iran was “seriously talking” with Washington, and hinted that a deal that would avoid the use of military strikes could be agreed.
Bitcoin hits lowest since last April
Bitcoin dropped to a 10-month low in early trading today, as investors piled out of riskier assets.
The world’s largest crypto assset dropped to $74,546, its lowest level since 7 April last year – and further from its record high above $125,000 set last year.
Kyle Rodda, senior financial market analyst at capital.com, says some traders are being forced to deleverage after losing money on gold and silver contracts:
The movements in markets on Friday night were a once in a generation event. The mania in gold and silver came to an abrupt halt, with the former crashing by as much as 10% and the latter collapsing by as much as 30%. The move in gold was the largest since the 1920s. The move in silver was the largest in history.
While technically stores of value, still with strong long term fundamentals, the total collapse in precious metals prices shows that any market can become gripped by mania, especially in the age of financialisation and gamification. Given the build up of positioning and leverage involved, the sell-off is bleeding into other markets.
Effectively, a deleveraging is happening, forcing traders to sell other assets to cover losses on their losing precious metals positions. That’s contributing to the sell-off in stocks and probably contributed to Bitcoin’s plunge over the weekend.
Introduction: Gold and silver slump in 'metals meltdown'
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Commodity, precious metals and crypto asset prices are all sliding today, as the record-breaking rally in gold and silver cools.
Financial markets have begun the new week in a volatile mood, with analysts talking about a “metals meltdown” that is also rattling the equities markets.
Gold is falling back after a months-long rally drove it to a series of record highs. It’s slumped by over 8% so far this session, down to $4,465 a ounce, having hit a record high of nearly $5,600/oz just last week.
Gold's shed $1000 from Thursday, that is wild pic.twitter.com/VhoeBBovco
— David Ingles (@DavidInglesTV) February 2, 2026
Silver is living up to its nickname of the “Devil’s Metal” (for its volatility) – it has slumped by 13% today.
Both gold and silver tumbled last Friday, the day in which Donald Trump said he would nominate Kevin Warsh to be the next chair of the Federal Reserve.
Michael Brown, senior research strategist at Pepperstone, says:
Certainly, the final trading day of January was anything but calm, being dominated by what can only be termed a meltdown in the metals space. In terms of ‘scores on the doors’, spot gold ended Friday with losses of 9%, bullion’s worst day since 2013, and fourth worst in the last 45 years.
Silver, meanwhile, shed as much as 35% at the lows, before trimming losses to end the day a still-chunky 26% lower, the worst daily loss ever, at least per Bloomberg data.
Warsh does have a reputation as a more hawkish policymaker than rival candidates, who wants to shrink the Fed’s balance sheet, so investors may be anticipating tighter monetary policy than expected (although Trump is already joking about suing Warsh if he doesn’t lower interest rates).
Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia (CBA), explains:
“A stronger U.S. dollar is also adding pressure on precious metals and other commodities, including oil and base metals.”
“The decision by markets to sell precious metals alongside U.S. equities suggests investors view Warsh as more hawkish.”
But.. KCM Chief Trade analyst Tim Waterer argues the selloff goes deeper, explaining:
“The Warsh nomination, whilst likely being the initial trigger, did not justify the size of the downward move in precious metals, with forced liquidations and margin increases having a cascading effect.”
The agenda
7am GMT: Nationwide house price index for January
9am GMT: Eurozone manufacturing PMI for January
9.30am GMT: UK manufacturing PMI for January
11.45am BST: Bank of England governor Sarah Breeden gives speech on ‘Next generation UK retail payments’
3pm GMT: US manufacturing PMI for January
