Gold, Silver Prices Snap Record Rally Amid Fed Nomination

Precious metals such as gold and silver have been trading at lifetime highs across all markets with the tremendous rally in prices driven by macro, monetary and geopolitical convergence. Research analysts tracking the commodity sector have been shocked by the sharp rise in the metal rally and indicate in their research reports that precious metals are responding to currency confidence stress, risk hedging positioning undertaken by investors and heightened macro and geopolitical uncertainty.

So what has been driving silver and gold prices? Factors which have impacted these are US dollar weakness, US monetary policy expectations of rate cuts, economic stress signals on the back of sluggish US labour market and US consumer confidence at eleven year lows. Apart from demand and supply positioning in gold and silver, any price action is very sensitive to monetary policy signals and currency movement around the world.

Silver has structurally transitioned from a cyclical precious metal into a core industrial commodity and a critical input which is powering clean energy, electrical vehicles and electronics manufacturing. Silver as a metal is the highest electrical conductor having superior thermal conductivity and exceptional reflectivity. These key properties are driving fantastic demand for silver in many sectors such as electronics manufacturing, which is the largest demand driver for the metal.

Silver being such a power efficient and technically non-substitutable critical input is used in electronic devices such as smart phones, laptops, television and gaming consoles. It is also used in AI and Data Centres which is the fastest growing segment around the world. The other demand segments are Electric vehicles and charging infrastructure. But the structural growth engine would be Solar energy wherein 20 gram of silver per solar panel is used as conductive paste on silicon wafers. Research analyst tracking the precious metal sector estimate that 85% of available silver could be consumed by the Solar segment alone over the next 25 years.

Apart from actual users, countries, sovereign wealth funds, mutual funds, ETFs and high net investors have been buying gold and silver as a safe alternative investment asset in their portfolio. Indian retail investors on the other hand have shifted their new investment options to gold and silver on the back of poor equity performance during 2025. Also, lower fixed deposit interest rates have also turned investors into buying gold and silver mutual funds and ETFs as an alternative investment option.

Gold prices have jumped more than 24% in the month of January 2026 with the largest monthly advance since January 1980, while silver prices have surged by 62% so far this month as its best monthly performance ever. After sustaining the huge rally for months, gold and silver prices made a sharp decline on Friday, 30 January 2026 ahead of President Trump’s nomination of the new Federal Reserve chair Kevin Warsh, who is considered to be inflation hawk.

Analysts expect the new Fed chief to advocate tight monetary policies, pro growth policies and a light US balance sheet. This could result in the appreciation of the US dollar which may drive investors away from safe assets like gold and silver. This has resulted in a sharp fall in prices of precious metals on 30 January 2026 snapping the record bull run in gold and silver prices. The global market thinks that higher US currency makes dollar priced metal more expensive for holders of other currencies, thereby curtailing demand and investors booking profits and protecting their invested capital.

So what should retail investors do? Analysts and fund managers tracking the commodity market advice that any fall in gold and silver prices can be considered as a buying opportunity as the overall volatility could persist for some more sessions before the market stabilises at lower levels. Hence, portfolio investors can accumulate gold and silver through the SIP method with a medium term timeframe for solid portfolio gains.