The gold price’s explosive run will likely continue, as it broke the historic $5,200-per-ounce barrier on Wednesday.
Silver prices also rose above $116 an ounce on the COMEX for the first-time earlier Wednesday, as the white metal maintained its unprecedented run.
Both metals are expected to rise in value due to their industrial and safe-haven demand.
Gold prices rose by over 3% on Wednesday as geopolitical tensions caused the dollar to fall near a four-year low.
Gold prices at the COMEX at the time this article was written were $5,294.35 an ounce up 3.4% while silver at $115.480 an ounce.
Gold has reached a new record of $5,297.86 and looks to break the $5,000 level.
Gold and Silver’s rise is driven by market forces
Later on Wednesday, the US Federal Reserve will also make a decision on its monetary policy.
US Dollar faced “a crisis of confidence”, selling sharply, and hovering around four-year lows.
When asked about the possible excessive depreciation of the US dollar, US President Donald Trump responded that the currency was “great.”
In January, amid growing worries about the job market’s weakness and rising prices, US consumer sentiment dropped to its lowest level in more than 11-and-a half years.
Trump also said that he would soon name the next head of the US Central Bank, and predicted that rates will decrease after the appointment.
It is expected that the Federal Reserve will keep interest rates at their current January meeting of monetary policy, scheduled to end later today.
Gold’s upward trend continues, even if there are short-term corrections. Alex Tsepaev is the chief strategist of B2PRIME Group. He said that investors who have entered the gold market in this year will likely see the price reach new heights, and even approach $5,000, within the next few years.
Currently, the world is characterized by rapid and extreme change.
Tsepaev stated that the global economy is expanding and experiencing a trend of dedollarisation. Demand from developing countries has also been sustained.
The issue of US debt and the growing tensions in geopolitics, like new tariffs on goods or Greenland’s purchase are also important.
Gold is a good safe haven investment.
Silver’s Industrial Link vs. Gold as a Safe-haven
Gold will continue to be a preferred alternative asset for safe haven.
The strong desire for this currency stems from the fact that it has been a longstanding store of value, and is independent in its institution.
This means it’s not exposed to counter-party risk. Silver is also subject to the same principle, and this is why its recent rise has been disproportionately compared with gold”, Thu Lan Nguyen said, Head of FX & Commodity Research at Commerzbank AG.
Silver, unlike gold, has never been a haven of safety, so the increase in price could be more unstable.
Silver, unlike gold and other precious metals, is more sensitive to fluctuations in the economy due to its high industrial usage.
Nguyen believes that the near quadrupling in the price of silver since 2025 will negatively affect industrial demand.
The physical silver market, on the other hand has become quite constrained in recent years.
The future of precious metals markets will ultimately depend on the geopolitical situation.
Geopolitics, monetary policy and geopolitics
Shifts in geopolitical dynamics could trigger a significant correction of the market, characterized by broad price drops.
Commerzbank identifies four scenarios that could be a possible outcome.
Nguyen said that a de-escalation of major conflicts such as the conflict in Ukraine and the subsequent lifting of Western sanctions on Russia would eliminate a significant source of market volatility.
She added that this move toward stability may prompt a new assessment of economic and risk forecasts. This could lead to an abrupt market correction.
A return to multilateralism and greater global co-operation could act as catalysts for correction.
It would mean reversing current trade barriers and, in particular, reducing or removing US tariffs. There would also be a clear, renewed commitment to international agreements about both security and trade.
In addition, all governments would have to implement and adopt credible measures of fiscal consolidation aimed at stabilizing high public debt levels or reducing them significantly.
This combination of factors will signal to investors a major shift in their long-term calculation of risk and reward.
The independence of the US Federal Reserve and its actions are also important.
If the US Federal Reserve does not respond to political pressure from Trump or others, like lowering interest rates significantly, a market correction may occur.
If you maintain a policy that is based more on the economic fundamentals than it is based upon political expediency then this could result in tighter monetary policies than what markets are currently pricing, causing a decline in asset values.
Nguyen stated that “given the level of uncertainty in the future political development and current dynamics, making a price prediction is almost impossible.”
Our expectation that the US will adopt a much more expansive monetary policy is a major factor in our view of further price rises.
This article Precious Metals Rally Continues with Gold Nearing $5,300 and Silver topping $116 first appeared on The ICD
