I just looked at a batch of data, and the Federal Reserve’s policy outlook is reshaping the entire market landscape again—this could be a key signal for precious metals investors.

The U.S. February employment report came in unexpectedly weak—non-farm payrolls unexpectedly fell by 92,000, far below the expected increase of 55,000, which was the largest decline in four months. The unemployment rate also unexpectedly rose to 4.4%, while market expectations stayed unchanged. Such data typically increases the appeal of gold and silver, because it suggests the Fed may need to adjust its policy stance.

Interestingly, even though the employment data was weak, average hourly earnings were strong: up 0.4% month over month and up 3.8% year over year, both beating expectations. These mixed signals are prompting the market to reassess the future inflation and interest-rate path.

From a global perspective, the escalation of the Middle East situation has provided a clear boost to demand for precious metals. Iran launched drone and missile attacks on multiple countries in the region, raising concerns that the conflict could expand. Geopolitical tensions like these typically drive up demand for safe-haven assets. At the same time, oil prices surged to a 2.25-year high—this not only heightens inflation expectations, but also reinforces demand for precious metals as an inflation-hedging tool.

The performance of gold and silver does reflect these pressures. COMEX gold for April rose by 78.80 points, up 1.55%; May silver rose by 2.374 points, up 2.89%. Behind these gains are multiple drivers: safe-haven demand, inflation hedging, and ongoing central bank buying. In January, China’s central bank increased its gold reserves by 40,000 ounces, reaching 74.19 million ounces—this is the 15th consecutive month of increasing gold reserves. This scale of central bank purchases typically signals a long-term bullish stance.

The Fed’s policy outlook is also worth paying attention to. The market currently expects the Fed to cut rates by about 37 basis points in 2026, while the Bank of Japan is expected to raise rates again by 25 basis points. Changes in the interest-rate spread put pressure on the U.S. dollar, while also supporting U.S. dollar-denominated gold. Although Fed Governor Christopher Waller said the Iran conflict is unlikely to lead to sustained inflation, such remarks do not appear to have deterred the market’s rush toward safe-haven assets.

From a technical standpoint, long positions in gold ETFs have recently hit a 3.5-year high, indicating that institutional investors’ interest in allocating to gold remains strong. Given global political uncertainty, the U.S. tariff issue, geopolitical risks in Ukraine and Venezuela, as well as U.S. fiscal deficits and policy uncertainty, investors appear to be actively reducing exposure to dollar assets and turning to precious metals as a store-of-value tool.

Overall, in the short term, there are quite a few factors supporting gold’s rise. Geopolitical risk, demand for inflation hedging, support from central bank buying, and expectations that the Fed may adopt a more accommodative policy—all of these are pushing up precious metal prices. If the Middle East situation continues to escalate, or if U.S. economic data continues to come in weak, these factors could further strengthen gold’s upward momentum. From this perspective, precious metals do seem to have substantial upside support in the current environment.