Gold and Silver Continue Historic Rally: Healthy Pullback After Record-Breaking Run

Jan 29
3 min read

Gold and silver experienced a healthy correction Thursday after touching all-time highs, with gold pulling back 4.6% to $5,149 after hitting $5,594 and silver dropping 6.6% to $108 after reaching $121.64. Despite the pullback, both metals remain on track for their strongest monthly performance since the 1980s, with gold up 19% in January and silver soaring over 50% year-to-date. The correction represents normal profit-taking after an extraordinary six-month rally that has rewritten the precious metals playbook.

Understanding the Six-Month Bull Run

The charts tell the remarkable story: gold has climbed from roughly $3,500 in August 2025 to over $5,500 in January 2026, while silver exploded from $40 to $121 over the same period. Silver skyrocketed 150% in 2025 alone, outflanking gold's 66% gain, which itself marked the best yearly performance since 1979. "Both silver and gold have now entered uncharted territory," said Nic Puckrin of Coin Bureau. Goldman Sachs recently lifted its December 2026 gold forecast to $5,400, while analysts predict silver could sustain $100+ levels through year-end.

Silver's Even Wilder Ride

Silver experienced an even more violent correction, plunging 6.6% to $108.84 per ounce after touching a record high of $121.64 earlier in the session. The white metal has surged over 50% year-to-date, driven by severe supply deficits and momentum buying. Platinum fell 1.7% to $2,650.15 after hitting $2,918.80 on Monday, while palladium dropped 6.7% to $1,935. Guy Wolf of Marex explained these smaller markets are "totally detached from where physical demand is robust" due to speculative inflows.

Why Smart Money Keeps Buying

Central banks, institutional investors, and retail buyers continue accumulating physical metals despite record prices. Tether announced plans to allocate 10% to 15% of its portfolio to gold, while SPDR Gold Trust holdings reached a four-year high. Central bank demand remains robust as nations diversify away from dollar-denominated assets in what analysts call the "debasement trade." China's export controls on silver, combined with AI chip manufacturing demand, created supply deficits that pushed industrial consumption to unprecedented levels.

Geopolitical Tailwinds Remain Strong

President Trump's aggressive posture on Iran, Venezuela, and Greenland adds fuel to safe-haven demand, while attacks on Federal Reserve independence shake confidence in traditional financial institutions. Markets expect two Fed rate cuts in 2026, making non-yielding gold more attractive. "Faith in the U.S. and its assets have been shaken, maybe permanently, and this is driving money into precious metals," said Kyle Rodda of Capital.com. The phenomenon reflects structurally higher geopolitical risk rather than temporary market jitters.

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Market Experts See Further Upside

Thursday's correction doesn't concern long-term bulls. "While the physical supply deficit should support a high silver price level in the near term, we caution that silver usually experiences much larger drawdowns after an extended rally than gold," noted J. Safra Sarasin's Claudio Wewel. JP Morgan forecasts gold averaging $5,055 in Q4 2026, rising toward $5,400 by end of 2027. Metals Focus expects gold to reach $5,500 highs in 2026. The pullback offers entry points for investors who missed the initial surge, with retail FOMO likely to drive the next leg higher.

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