India-U.S. Trade Pact Leaves Gold Bugs Unimpressed as Precious Metals Rebound Fizzles

If you were hoping the India-U.S. trade deal would spark a gold rush, you’re probably still waiting for the memo. In a week where equity markets staged a risk-on rally and the dollar flexed its muscles, gold’s much-hyped rebound lasted about as long as a TikTok trend. The metal’s +23% surge in January had the newsletter crowd foaming at the mouth, but February is serving up a cold dose of reality. Gold’s rally is fizzling, and the India-U.S. trade pact, touted as a potential game-changer for global demand, is barely moving the needle.

Let’s get granular. Spot gold, which flirted with $2,200 per ounce in late January, is now stuck near $2,040, down -7% from its highs. Silver, which tried to play catch-up, is back below $24, wiping out nearly all of its year-to-date gains. The precious metals ETF complex is bleeding assets, with GLD seeing outflows of $1.2 billion in the last week alone, according to ETF.com. The India-U.S. trade agreement, signed on February 2, was supposed to unlock a wave of Indian gold imports by lowering tariffs and streamlining customs. Instead, Indian jewelers are reporting business as usual, and the World Gold Council says physical demand is “steady but unspectacular.”

Meanwhile, the macro backdrop is anything but gold-friendly. The ISM manufacturing PMI just hit a 40-month high, reigniting fears of a Fed that’s nowhere near done hiking. The dollar index is up 1.4% since the trade pact was announced, and real yields are ticking higher. In other words, the fundamental pillars of the gold bull case, dollar weakness, inflation angst, central bank buying, are all wobbling.

Historical context matters here. The last time gold staged a +20% rally in a single month was August 2020, at the height of pandemic panic. Back then, the move was fueled by a tidal wave of retail and institutional flows, not incremental trade policy tweaks. This time, the rally looks more like a squeeze than a structural shift. The Commitment of Traders report shows managed money net longs at their highest since 2021, while ETF holdings are actually declining. That’s not the kind of positioning you want to see if you’re betting on a breakout.

Cross-asset correlations are also telling a story. Gold’s traditional inverse relationship with the dollar has broken down, with both assets rallying in January before diverging sharply in February. The metal’s correlation with equities has flipped positive, meaning gold is trading more like a risk asset than a safe haven. That’s bad news for anyone hoping the India-U.S. deal would provide a floor for prices.

So what’s really driving gold right now? The answer is flows, not fundamentals. The ETF exodus is a red flag, and the lack of follow-through from Indian demand suggests the trade pact was more sizzle than steak. With real rates rising and the Fed still in play, gold bugs are running out of narratives. The risk is that the January rally was a classic blow-off top, and the path of least resistance is lower.

Strykr Watch

Technically, gold is clinging to support at $2,030, with a break below that level opening the door to a test of $1,980. Resistance sits at $2,075, and the 50-day moving average is rolling over. RSI is neutral at 52, but momentum is waning. Silver is even weaker, with support at $23 and resistance at $25. The Strykr Score for volatility is a punchy 81/100, expect more whipsaws.

If gold loses $2,030, the next stop is $1,980, with a potential flush to $1,950 if ETF outflows accelerate. On the upside, a close above $2,075 could spark a short-covering rally, but the burden of proof is on the bulls. Watch for Indian import data and U.S. CPI prints as near-term catalysts.

The bear case is gaining traction. A stronger dollar, rising real yields, and fading ETF demand all point to lower prices. If the Fed signals more hikes or the dollar rips higher, gold could be in for a rough ride. There’s also the risk that Indian demand disappoints, and the trade pact turns out to be a nothingburger.

Opportunities exist for nimble traders. Short gold on a break of $2,030, with a stop at $2,075 and a target at $1,950, looks attractive. Alternatively, fade silver rallies toward $25, or play the long dollar trade via DXY or USDJPY. For the brave, a contrarian long at $1,980 with a tight stop could pay off if ETF flows stabilize.

Strykr Take

The India-U.S. trade pact is a headline, not a catalyst. Gold’s January rally was fun while it lasted, but the market is moving on. If you’re still clinging to the gold bull case, you’re fighting the tape. The risk-reward now favors the bears, but don’t get complacent, volatility is your only friend in this market. Trade the levels, not the headlines.

Date Published: 2026-02-03 02:31 UTC