Gold prices fall in early 2026: Dollar gains; investors watch US rate signals closely

Gold prices declined on Wednesday, ending a short rally that had lifted the metal to record levels in late December. US gold futures for February delivery fell about 0.5% to $4,471.30. Spot gold dropped nearly 0.8% to $4,461.51 per ounce. Prices had earlier touched a one-week high before turning lower. The fall came after gold hit an all-time high of $4,549.71 on December 26. Analysts said the latest move reflects profit booking at the start of the New Year, as investors reassess risks and near-term market direction. Jamie Dutta, chief market analyst at Nemo.money, said the year has begun with sharp swings across markets. He added that investors are taking a step back to review recent global developments, including tensions involving the US and Venezuela.

A stronger US dollar was one of the main reasons for the drop in gold prices. The dollar was trading near a more than two-week high. Since gold is priced in dollars, a stronger greenback makes the metal more expensive for buyers using other currencies. This often reduces demand in the short term. As a result, even safe-haven assets like gold can face pressure when the dollar gains strength. Markets are also reacting to changing expectations around US monetary policy.

Statements from US Federal Reserve officials added to uncertainty. Federal Reserve Governor Stephen Miran said aggressive interest rate cuts may be needed this year to support economic growth. In contrast, Richmond Federal Reserve President Thomas Barkin said any rate changes must be carefully adjusted based on incoming economic data. At present, markets are pricing in two interest rate cuts in 2026. Investors are closely watching key US data releases, including ADP employment figures and the non-farm payrolls report, for clearer signals on the Fed’s next steps. Gold usually performs well when interest rates are low because it does not offer interest income. It also tends to attract buyers during periods of economic or geopolitical stress.

The weakness was not limited to gold. Spot silver fell about 2.3% to $79.40 per ounce. This was down from its record high of $83.62 reached on December 29. Platinum dropped around 6% to $2,297.56 per ounce after touching a record level earlier in the week. Palladium also fell, trading about 4.5% lower at $1,740.12 per ounce. Despite the recent decline, analysts say precious metals are likely to remain in focus as markets adjust to changing rate expectations and global risks.