Gold prices tumbled more than 2% on Tuesday, February 17, 2026, as a “perfect storm” of thin holiday trading, a surging US dollar, and a sudden wave of global diplomacy pulled the rug out from under the precious metal. After a volatile start to the year, spot gold dropped to $4,898 per ounce, hitting its lowest level in over a week as investors pivoted away from safe-haven assets.
Gold fell as much as 10% early Monday, while silver’s year-to-date gains were wiped out, as a record-breaking precious metals rally unwound at breakneck speed. Latest: https://t.co/xbmMaGEVjZ pic.twitter.com/IlpiZgLn1c
— Bloomberg (@business) February 2, 2026
The “Holiday Lull” and Lack of Liquidity
Trading volumes were exceptionally light as major financial hubs across Asia, including China, Hong Kong, Singapore, and South Korea, remained closed for the Lunar New Year holidays. With US markets also having been shut for Presidents’ Day on Monday, the market lacked the necessary “bids” to maintain gold’s support levels. Analysts noted that this thin liquidity often exaggerates price swings, making the metal particularly vulnerable to the day’s stronger US Dollar Index, which rose 0.2%.
Easing Geopolitical Tensions in Geneva
The primary driver for the sell-off was a significant shift in the global risk landscape. High-stakes diplomatic talks in Geneva have dampened the “geopolitical risk premium” that usually props up gold prices:
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US-Iran Talks: Second-round nuclear negotiations involving Middle East envoy Steve Witkoff and Jared Kushner have shown “signs of progress,” according to White House sources.
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Russia-Ukraine Peace Talks: US-mediated discussions regarding territorial disputes are also taking place this week, further easing fears of immediate escalation in Europe.
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Focus Shifts to the Federal Reserve
Investors are now bracing for the release of the Federal Reserve’s January meeting minutes on Wednesday. The market is currently searching for clues on the timing of interest rate cuts; while traders are hoping for early easing, the Fed has signalled a more cautious approach.
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Current Rates: The Fed Funds rate remains at 3.50–3.75%.
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Future Outlook: Most analysts expect the first rate cut in June 2026, though a more “hawkish” tone in the minutes could keep gold under pressure.
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