Gold prices showed tentative signs of stabilisation at the start of February after suffering one of their sharpest short-term selloffs in years. The precious metal fell about 4% to below $4,700 per ounce on the first trading day of the month, following a dramatic 10% intraday plunge during the Asian session and a steep 9% decline on Friday.

The sudden reversal marked a pause in gold’s powerful rally, which had previously driven prices to record highs amid aggressive central bank buying and rising investor demand for hard assets.

What Triggered the Selloff

Friday’s rout was largely sparked by a shift in US monetary policy expectations after President Donald Trump nominated Kevin Warsh to lead the Federal Reserve. Warsh is widely viewed by markets as a more hawkish figure, a perception that immediately lifted the US dollar and pressured gold prices.

At the same time, investors moved to lock in gains after months of uninterrupted upside. Gold had benefited from what many traders described as the “debasement trade,” as concerns over ballooning government debt pushed capital out of currencies and bonds and into physical assets.

Safe-Haven Demand Still Intact

Despite the violent pullback, the broader narrative supporting gold has not fully unraveled. Persistent geopolitical tensions, elevated economic uncertainty, and renewed debate around the Fed’s independence continue to underpin gold’s role as a long-term store of value.

On February 2, 2026, gold fell to $4,659.86 per troy ounce, down 4.65% on the day. Even after the correction, prices remain up 4.80% over the past month and 65.61% higher than a year ago, according to CFD trading that tracks the benchmark gold market. Gold reached an all-time high of $5,608.35 in January 2026, underscoring how extended the rally had become before the selloff.

Outlook

While near-term volatility is likely to persist, the latest move appears more consistent with a corrective phase than a full trend reversal. Market participants will now watch US monetary policy signals and dollar strength closely to determine whether gold can rebuild momentum or remain under pressure in the weeks ahead.