Gold price cools after record run; silver reaches new peak at Rs 2,72,202 — What’s driving the rally?

Gold and silver prices eased on Tuesday after hitting record highs in the previous session, as investors chose to book profits. The pullback came even as global uncertainty around the US economy, politics, and geopolitics continued to support precious metals.

On the domestic front, MCX gold February futures slipped 0.44 per cent to Rs 1,41,400 per 10 grams around 1.15 pm. MCX silver March futures traded almost flat, down 0.01 per cent at Rs 2,68,926 per kg.

The silver market experienced a very sharp movement, and now the prices have surpassed Rs 2,79,500, which is a very strong rise of almost Rs 7,000.

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In the international market, silver has gone over $89, reflecting strong momentum worldwide.

Gold, however, witnessed mild profit booking. MCX gold was trading around Rs 1,41,625 per 10 grams, down 0.29 per cent.

According to data from the India Bullion and Jewellers Association (IBJA), the price of 10 grams of 24-carat gold stood at Rs 1,40,482, slightly lower than the previous close of Rs 1,40,499. This mild fall followed a sharp rally that pushed global gold prices above $4,600 per ounce for the first time, triggering profit booking among traders.

Why did gold and silver hit record highs on Monday?

Gold and silver surged to fresh lifetime highs on Monday amid a broad-based metals rally. The key trigger was rising concern over the independence of the US central bank after the US Justice Department threatened criminal action against the Federal Reserve.

The yellow metal jumped above $4,600 an ounce, while silver crossed $86 an ounce. Investors rushed towards safe-haven assets as fears grew that political pressure could weaken the Fed’s ability to control inflation.

Fed Chair Jerome Powell said the potential indictment was part of “threats and ongoing pressure” aimed at influencing interest-rate decisions. These remarks further rattled markets, as mentioned in the report.

How are US politics and the Fed impacting bullion prices?

Markets are closely watching the criminal probe linked to Jerome Powell’s testimony. Powell has described the situation as politically motivated pressure to force interest-rate cuts. Rahul Kalantri, VP Commodities at Mehta Equities Ltd, said uncertainty around the probe has kept investors cautious and supportive of gold prices, IANS reported.

Another key event to watch is January 21, when the US Supreme Court will hear oral arguments in a case involving Fed Governor Lisa Cook. Strategists at Wells Fargo warned that if the court sides with the Trump administration, the US dollar could fall by as much as 2 per cent. A weaker dollar generally boosts gold, as the metal is priced in US currency.

Last week’s US jobs report also added fuel to the rally. Payroll gains came in weaker than expected, strengthening market hopes that the Federal Reserve may deliver further rate cuts later this year. While rates are expected to remain unchanged this month, traders continue to price in two cuts in 2026.

What role are geopolitics playing in the rally?

Geopolitical tensions continue to be the main drivers of the prices of gold and silver. Trump raised the tension by imposing 25 per cent tariffs on countries trading with Iran, while at the same time, he was hinting at possible military action as protests in Iran got worse.

The demonstrations have been going on for a while, and people are already talking about the instability in Iran and how it may affect the oil supply. Besides that, there are worries about the coming of a new Cold War as the US and Russia are flexing their muscles in Europe and making claims over other territories like Greenland.

The uncertainties that come with these scenarios have made investors go for the least risky assets, which are the precious metals.

What are the key levels to watch for gold and silver?

Analysts say gold has support in the range of Rs 1,39,550 to Rs 1,37,310, while resistance is seen between Rs 1,44,350 and Rs 1,46,670.

Silver, on the other hand, has support in the Rs 2,60,810 to Rs 2,54,170 zone, with resistance placed between Rs 2,71,810 and Rs 2,74,470.

Despite the recent pause, silver continues to trade with a strong structural bias. Analysts see medium-term targets above $100 during 2026, supported by persistent supply shortages and rising demand from industrial and green-energy sectors.

Is there still upside left in gold and silver?

Even after the sharp rally, many investors remain confident about gold’s long-term outlook. Global holdings in bullion-backed exchange-traded funds (ETFs) have increased but are still well below their peak levels.

Bullion-backed ETFs expanded by almost 20 per cent last year, as spot gold recorded its best annual performance since 1979. Global ETF holdings recently touched around 3,082 tonnes, compared with the record high of 3,460 tonnes seen in October 2020.

Due to decreasing US interest rates, increasing geopolitical uncertainties and uninterrupted purchases by the central banks, the market experts have opined that gold and silver prices will be further boosted. In this situation, the major query put forward by the market is whether gold will be able to reach the $5,000 per ounce level in the next several months.