After capping their best years since 1979, gold has jumped another 24% this month to top $5,500 an ounce, while silver surged 60% to exceed $120 an ounce and extend a historic short squeeze.
Gold and silver’s relentless start to a year has taken out record after record, shocked seasoned traders and analysts, and driven exceptional price volatility.
After capping their best years since 1979, gold has jumped another 24 per cent this month to top $5,500 an ounce, while silver surged 60 per cent to exceed $120 an ounce and extend a historic short squeeze. Investors piled into the time-honored havens amid concerns about currency debasement and the Federal Reserve’s independence, trade wars and geopolitical tensions.
While some expect more gains to come, the pace of the rally has sparked concerns that a sizable selloff is due. The threat of large price swings was reinforced on Thursday, as both metals fluctuated wildly.
Here is a look at what has driven the rally and where prices might go:
China piles in
Speculative demand from Chinese investors — highlighted by premiums that local prices have commanded over global benchmarks — helped drag global prices higher.
There have been other signs of massive demand, too. China’s only pure-play silver fund halted trading briefly this week and turned away new customers, with warnings that the premium over Shanghai Futures Exchange contracts is “unsustainable.”
Chinese retail investors tend to be trend-following, like traders in US futures and derivatives markets, Citigroup Inc wrote earlier this week. The bank predicted that strong buying would continue “due to robust short-term momentum,” while forecasting that silver would hit $150 within three months.
Silver ETFs buck price spike
Gold prices have risen alongside demand from exchange-traded funds backed by the metal. But silver’s recent rapid gains have come despite ETF outflows. Almost 30 million ounces — worth over $3 billion at current prices — have poured out since the start of January, data compiled by Bloomberg show. That helped ease tightness in the dominant spot trading hub of London.
It’s a bit of a puzzle how prices soared so much as silver ETFs saw those outflows. Since ETFs are a popular way for retail and institutional investors to get exposure, the divergence suggests other sources of demand have been driving silver higher. That includes physical bar and coin purchases and demand from Chinese buyers.
ETF trading has been frenetic, however. The iShares Silver Trust, the largest silver-backed fund, recorded almost $40 billion in turnover on Monday, almost on a par with the State Street SPDR S&P 500 product and exceeding the $23 billion of trading in Nvidia Corp stock or Tesla Inc’s $22 billion in turnover.
A few months ago, daily trading in the iShares silver ETF was about $2 billion, before it increased to around $10 billion in late December.
options frenzy
The options market is another example of the speculative fervor sweeping precious metals. Call options, which give holders the right to buy at a pre-determined price and time, are seen by some investors as a cheap way to bet on market upside.
For the iShares Silver Trust, total call volume hit a record high on Monday. The cost of buying calls on silver futures relative to the cost of buying equivalent puts, which protect against price declines, also jumped to historical highs in January. That points to a wave of bullish bets.
On the other side of the trade, dealers have needed to hedge against the call options they’ve sold as prices surged. They do so by buying precious metals futures in growing volumes as prices rise, and that activity has been “mechanically reinforcing upward price momentum”, Goldman Sachs Group Inc said in a note.
Hedge funds favor gold
Hedge funds have taken a differing view of the metals of late, with money managers increasing bullish wagers on US gold futures to the highest in almost four months in the week ended January 20 amid anxieties over US threats to annex Greenland.
Yet speculators have backed away from silver, with the latest data showing bullish bets falling to the lowest in nearly two years. That, along with ETF outflows, further suggests the rally has been driven by retail buying as well as demand in China and India.
Selloff risk?
With gold and silver never jumping so much already this year, some technical indicators flashed warning signs. One is the relative-strength index, which in recent weeks signaled that both metals may have become overbought and due a correction.
Gold’s RSI level recently hit the highest in decades. On Thursday, gold slid as much as 5.7 per cent, the most since October, while silver tumbled as much as 8.4 per cent.
If there was to be a wider slump in precious metals, there risks being an outsized impact on silver, which is a much smaller market than gold and is sometimes dubbed the devil’s metal because of its often wild swings.
More stories like this are available on bloomberg.com
Published on January 30, 2026