Dollar Retreats and Precious Metals Rally

Economic Outlook - The US economic outlook is improving as uncertainty fades, but risks remain, particularly with hiring concentrated in a few sectors and inflation above the Fed's goal [2] - Markets are discounting a 9% chance for a -25 basis point rate cut at the next policy meeting on March 17-18 [1] Dollar Performance - The dollar fell to a 4-year low following President Trump's comments on its weakness, compounded by foreign capital outflows due to a growing budget deficit and political polarization [1] - The dollar index (DXY) decreased by -0.21%, influenced by a stronger Chinese yuan and higher T-note yields that weakened the dollar's interest rate differentials [6] - The dollar's losses were somewhat contained due to increased liquidity demand from a stock sell-off and supportive comments from Richmond Fed President Tom Barkin regarding the economic outlook [5] Government Shutdown Impact - The partial US government shutdown, now in its fourth day, negatively impacts the dollar, although it is expected to be brief as a spending bill vote is anticipated [3][13] - President Trump announced a tentative deal with Senate Democrats to fund the Homeland Security Department for two weeks, allowing more time for immigration talks [3] Precious Metals Market - Precious metals are experiencing increased demand as a safe-haven asset amid geopolitical risks and US political uncertainty, with a notable rise in gold and silver prices [10][11] - Central bank demand for gold remains strong, with China's PBOC increasing its reserves by +30,000 ounces to 74.15 million troy ounces in December, marking the fourteenth consecutive month of increases [16] - Fund demand for precious metals is robust, with gold ETF holdings reaching a 3.5-year high, although silver ETF holdings have seen some liquidation recently [17]