Gold near $5,600 an ounce, silver close to $120: Factors driving the latest rally

Gold prices extended their record run on Thursday (January 29), moving closer to the $5,600-per-ounce mark as investors increased allocations to safe-haven assets amid geopolitical tensions, policy uncertainty and macroeconomic stress.

Silver also advanced sharply, nearing the $120 an ounce level on sustained investment demand and supply tightness.

Spot gold rose 2.1% to $5,511.79 an ounce by 0039 GMT, after touching an intraday record of $5,591.61 an ounce.

Prices crossed the $5,000 an ounce threshold earlier this week for the first time and have gained over 10% so far this week.

Analysts at OCBC said rising government debt, geopolitical risks and unpredictable policy signals have reshaped gold’s role in portfolios. They noted that investors increasingly view gold not just as a hedge against crises or inflation, but as a neutral store of value that offers diversification across economic cycles.

The rally has drawn support from multiple factors, including strong safe-haven inflows, continued central bank purchases and a weaker U.S. dollar. Gold has risen more than 27% so far this year, following a 64% surge in 2025.

Market participants are also tracking geopolitical developments. US President Donald Trump on Wednesday (January 28) urged Iran to resume nuclear negotiations, warning of severe consequences in the event of future US military action. Iran responded by threatening retaliation against the US, Israel and their allies, adding to global risk sentiment.

On the policy front, the US Federal Reserve left interest rates unchanged, as expected. Fed Chair Jerome Powell said inflation in December likely remained well above the central bank’s 2% target, reinforcing uncertainty around the timing of future rate cuts.

IG market analyst Tony Sycamore said the sharp pace of the rally suggests a near-term pullback remains possible, but underlying fundamentals are likely to stay supportive through 2026, making any corrections attractive to long-term buyers.

Additional support came from crypto firm Tether, which announced plans to allocate 10%–15% of its investment portfolio to physical gold. Elevated prices have also driven increased retail buying in Asian markets, with strong demand reported in Shanghai and Hong Kong.

Analysts at Standard Chartered said the silver market is likely to remain in deficit this year, with limited availability of above-ground stocks contributing to tighter conditions.

-With Reuters inputs