Gold Breaks $5,500 Barrier in Historic Rally Driven by Record Investment

TLDR

• Gold prices surged to $5,542.40 per ounce on January 29, 2026, gaining 27-28% since the year began
• The World Gold Council reported record-breaking global gold demand in 2025, with investment purchases up 84% to 2,175 tons
• Silver reached its own all-time high above $120 per ounce, climbing approximately 60-67% in 2026
• A weakening dollar and geopolitical uncertainty are driving investors toward precious metals as safe-haven assets
• Banks are reducing trading positions due to limited balance sheets, decreasing liquidity and increasing market volatility

Gold prices climbed past $5,500 per ounce for the first time on January 29, 2026. The precious metal reached $5,542.40, extending a nine-day winning streak.

The rally marks a 27-28% gain since January 1, 2026. Gold crossed $5,000 per ounce just days before reaching the new milestone.

Silver also set a new record during the rally. The metal rose above $120 per ounce, posting gains of 60-67% year-to-date.

The World Gold Council released data confirming global gold demand reached unprecedented levels in 2025. Investment purchases drove the increase.

Total investment demand hit 2,175 tons in 2025 through gold ETFs, bars, and coins. This represents an 84% jump from 2024 levels.

Louise Street, a World Gold Council analyst, attributed the demand to economic and geopolitical risks. These concerns have pushed investors toward safe-haven assets.

The current rally is part of the debasement trade. This strategy involves moving capital away from traditional currencies due to concerns about monetary policy and fiscal spending.

Dollar Weakness and Fed Speculation Push Prices Higher

The Federal Reserve maintained current interest rates on January 28, meeting market expectations. Traders responded by increasing bets on future rate cuts.

Rate cuts typically benefit gold because the metal pays no interest. Lower rates reduce the opportunity cost of holding precious metals.

BlackRock’s Rick Rieder is being considered as a potential replacement for Fed Chair Jerome Powell. Rieder has publicly supported more aggressive rate reductions.

The U.S. dollar dropped to its lowest point in nearly four years. President Donald Trump said he was not worried about the currency’s decline.

Treasury Secretary Scott Bessent later stated the administration backs a stronger dollar. He dismissed speculation about currency market intervention.

Christopher Hamilton from Invesco noted that multiple factors are aligning to support gold. He said the rapid pace of price increases reflects declining confidence in traditional economic policies.

Trading Conditions Change as Volatility Increases

Banks have reduced their precious metals trading activity in recent weeks. Simon Biddle from Tullet Prebon explained that financial institutions face balance sheet limitations.

Lower trading volumes have reduced market liquidity. This has contributed to increased price volatility in both gold and silver.

Geopolitical tensions continue to support demand for safe-haven assets. The U.S. government issued warnings to Iran regarding nuclear policy.

The White House has also announced potential tariffs targeting South Korea and Canada. These policy moves have created uncertainty in financial markets.

Hao Hong from Lotus Asset Management described gold and silver as the best protection against extreme risk. He said gold acts as a foundation for valuing other assets.

CME Group increased margin requirements for silver futures contracts after the price surge. In China, one silver-focused investment fund closed to new investors as prices exceeded global benchmarks.

Technical indicators suggest both metals may be overbought. Gold’s relative strength index exceeded 90, while silver’s reached approximately 84.

Louise Street expects the momentum to persist through 2026. She cited continued economic instability and geopolitical uncertainty as key factors supporting ongoing demand for precious metals.

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