Gold Rally Nears $5,600, Silver Advancing Near $120: What are Factors Driving Rally?

Gold extended its record-breaking run on Thursday (January 29), pushing closer to the $5,600-per-ounce level as investors increased allocations to safe-haven assets amid heightened geopolitical tensions, policy uncertainty, and broader macroeconomic stress.

Gold’s Evolving Role in Portfolios

According to analysts, rising government debt, escalating geopolitical risks, and unpredictable policy signals have reshaped gold’s role in investment portfolios. Investors are increasingly viewing the metal not only as a hedge against inflation or crises, but as a neutral store of value that provides diversification across economic cycles.

Silver Also Riding on Gains

Silver also posted strong gains, advancing toward the $120-an-ounce mark, supported by sustained investment inflows and ongoing supply tightness in the physical market.

Spot gold climbed 2.1% to $5,511.79 an ounce by 0039 GMT, after touching an intraday record of $5,591.61. Prices crossed the $5,000-per-ounce threshold earlier this week for the first time and are up more than 10% so far this week.

Factors Driving the Rally

The rally continues to draw support from strong safe-haven inflows, ongoing central bank purchases, and a weaker U.S. dollar. Gold has gained more than 27% so far this year, following a sharp 64% surge in 2025.

Geopolitical Tensions Remain in Focus

Market participants are closely monitoring geopolitical developments. On Wednesday (January 28), U.S. President Donald Trump urged Iran to resume nuclear negotiations, warning of severe consequences in the event of future U.S. military action. Iran responded by threatening retaliation against the U.S., Israel, and their allies, adding to global risk aversion.

Also Read: Nippon India Gold and Silver ETFs Cross ₹1 Lakh Crore, Marking a Milestone for Precious Metal Investing 

Fed Policy Uncertainty Persists

On the monetary policy front, the U.S. Federal Reserve left interest rates unchanged, as widely 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 interest rate cuts.

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