Silver Nears $100 on Global Shortages While Geopolitics Lift Gold Higher

Gold hit an all-time high above $4,600 per ounce on January 12, 2026, amid growing concerns over the independence of the U.S. Federal Reserve. The move followed reports of a criminal investigation into Fed Chair Jerome Powell, which intensified safe-haven demand and pushed both gold and silver to record levels. Silver also surged, reaching $84.61 per ounce, driven by industrial demand, geopolitical tensions, and a tightening supply outlook.

The U.S. dollar weakened in response to the Fed’s potential legal challenges, reducing the currency’s appeal and increasing demand for non-yielding assets like gold and silver. Gold’s rise was further supported by elevated geopolitical risks, including ongoing tensions in Iran and the U.S. administration’s aggressive stance on global affairs.

Silver’s performance reflects a unique confluence of factors. Industrial demand is expected to remain strong through 2026, with over 58% of global consumption tied to sectors like solar energy, electric vehicles, and AI hardware. Supply constraints, including a shrinking inventory, have amplified price pressures.

Why Did This Happen?

Investor sentiment turned to precious metals as geopolitical uncertainty and Fed independence concerns escalated. The U.S. Treasury’s potential indictment of the Fed intensified worries about political influence on monetary policy, eroding confidence in the dollar. This dynamic supported gold’s rally, while silver’s industrial applications and supply shortages pushed the white metal toward $100 per ounce.

The U.S. jobs report in early January showed mixed results, with lower-than-expected employment growth raising expectations for further interest rate cuts. This reduced real yields and made gold and silver more attractive to investors.

How Did Markets React?

The dollar index fell by nearly 0.2% as gold and silver prices surged. The euro and the Swiss franc both strengthened against the dollar, reflecting a shift in global risk positioning. Market participants priced in a slightly higher chance of rate cuts in 2026, supporting precious metals across the board.

Silver’s technical performance also reinforced its bullish momentum. After consolidating in a $74.66 to $83.36 range, the metal broke out to new highs at the start of January. A sustained move above $83.36 could signal a continuation of the upward trend.

What Are Analysts Watching Next?

HSBC analysts expect silver prices to remain elevated through the first half of 2026 before facing a correction in the second half. They anticipate narrowing supply deficits and weakening industrial demand will limit upside potential. The bank raised its 2026 average price forecast to $68.25 per ounce but warned that overvaluation risks are growing.

Geopolitical developments, especially in the Middle East and Eastern Europe, will remain crucial for precious metals. Analysts are also closely monitoring the U.S. dollar’s performance ahead of key economic data releases, including inflation figures and employment reports. A rebound in the dollar could pressure gold and silver prices in the short term.

The Federal Reserve’s response to political pressures will also be pivotal. If the central bank is able to maintain policy independence, market focus may shift back to macroeconomic fundamentals. However, any escalation in political tensions or legal challenges to the Fed could reignite demand for safe-haven assets.

Silver’s path is more complex. While supply constraints and industrial demand support higher prices, concerns about overvaluation and potential corrections are rising. Institutional buying and ETF inflows have provided near-term support, but a shift in macroeconomic conditions or industrial substitution could dampen momentum.

Market participants are also tracking the outcome of the Section 232 investigation, which could impose U.S. tariffs on silver, platinum, and palladium. The report, expected in early January, will offer additional clarity on regulatory risks and market dynamics.