Gold and silver prices have surged to record highs in January 2026, with 24K gold reaching around Rs 1,44,000-1,45,000 for 10 grams and silver hitting around Rs 2,88,000 for 1 kg (Rs 28,800 for 10 grams) in India. The rally represents a continuation of 2025’s historic performance, when gold gained approximately 65%, and silver jumped nearly 150%, marking the best year for both metals since 1979.
Multiple structural factors are converging to support precious metals prices, including sustained central bank gold purchases, China’s implementation of silver export controls, concerns about Federal Reserve independence, a weakening U.S. dollar, and persistent geopolitical tensions.
Central Bank Gold Purchases Drive Demand
Central banks worldwide have maintained robust gold accumulation despite elevated prices, with purchases totalling 220 tonnes in the third quarter of 2025 alone, according to World Gold Council data. This represented a 28% increase from the second quarter.
The People’s Bank of China has emerged as the dominant buyer, extending its consecutive monthly gold purchases to 14 months as of December 2025. China added between 30,000 and 40,000 ounces monthly throughout 2025, bringing its official reserves to 74.15 million ounces (approximately 2,306 metric tonnes) by year-end, according to official data released by Chinese authorities.
China’s gold now accounts for approximately 7-8% of its foreign exchange reserves, up from 5.5% a year earlier. Analysts estimate China’s actual holdings may be significantly higher than officially reported figures.
Beyond China, the National Bank of Poland led global central bank buying in 2025, adding 95 tonnes through November and establishing gold at 28% of its total reserves. Other significant buyers included Kazakhstan (41 tonnes) and Brazil (43 tonnes over three consecutive months).
J.P. Morgan Global Research forecasts central bank demand will average approximately 585 tonnes quarterly in 2026, slightly below the 1,000+ tonnes annual pace of recent years but still well above the historical average of 400-500 tonnes.
China Implements Strategic Silver Export Controls
China introduced a licensing-based management system for silver exports effective January 1, 2026, fundamentally altering global supply dynamics. The Ministry of Commerce now requires all silver exporters to obtain approval as state-authorised trading enterprises and secure individual export licenses for each shipment.
The new regulations replace a quota system in place since 2000 and impose stringent requirements: exporters must demonstrate annual silver exports from 2022 to 2024, while new applicants need a minimum annual production exceeding 80 tonnes with consistent export records.
China controls an estimated 60-70% of global silver refining capacity. In the first 11 months of 2025, China exported over 4,600 tonnes of silver while importing only approximately 220 tonnes, according to Wind Information data.
The export restrictions have created an immediate market impact. Canadian mining company Kuya Silver reported receiving offers from Chinese companies to buy physical silver at approximately USD 8 above market prices, with an Indian buyer later offering USD 10 above market rates, demonstrating severe tightness in global supply.
Silver’s industrial applications make these controls particularly significant. The metal is essential for electronics manufacturing, solar panels, electric vehicles, semiconductors, and artificial intelligence infrastructure, with industrial demand representing over half of total silver consumption.
Global Silver Supply Deficit Intensifies
The silver market faces structural deficits that have persisted for five to six consecutive years. In 2025, global demand reached an estimated 1.2-1.24 billion ounces while supply remained constrained at approximately 1.01-1.03 billion ounces, creating a shortfall of 160-230 million ounces.
Global silver supply has contracted from 1.07 billion ounces in 2010 to roughly 1.03 billion ounces in 2024, according to industry data. Meanwhile, inventories at major trading centres have plummeted. COMEX stocks have declined 70% since 2020, while Shanghai inventories have reached 10-year lows.
Industrial demand drivers include electric vehicle production (up an estimated 20% in 2025), artificial intelligence data centres, and solar panel manufacturing. These applications require silver’s unique electrical conductivity and thermal management properties.
Investment demand has also accelerated. Chinese gold and silver exchange-traded funds saw record inflows of RMB 59 billion (approximately USD 8.2 billion, or 79 tonnes) during the first three quarters of 2025, surpassing all previous annual records.
Federal Reserve Independence Concerns Boost Safe-Haven Demand
Gold and silver prices surged to fresh records on January 13, 2026, following news that the U.S. Department of Justice opened a criminal investigation into Federal Reserve Chairman Jerome Powell.
The investigation, ostensibly focused on Powell’s testimony regarding the $2.5 billion renovation of the Federal Reserve’s Washington headquarters, triggered concerns about central bank independence. Powell characterised the potential indictment as “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey issued a rare joint statement warning that undermining the Fed’s autonomy represents a “clear and present danger” to the global financial order.
HSBC analysts noted that trading momentum could carry gold prices to USD 5,000 per ounce in the first half of 2026, attributing the rally to safe-haven demand, a weaker U.S. dollar, and policy uncertainty.
U.S. Dollar Weakness Supports Precious Metals
The U.S. dollar index fell approximately 9.5% in 2025, its worst annual performance since 2017. The Wall Street Journal Dollar Index declined over 6% through year-end 2025, according to market data.
This dollar weakness reflects broader concerns about U.S. fiscal management, mounting deficits, and what analysts describe as “de-dollarisation” efforts by central banks seeking to diversify away from dollar-denominated reserves.
Gold’s share of total global financial assets increased to approximately 2.8% in the third quarter of 2025, up from lower historical levels. Analysts estimate that global central banks’ monetary gold reserves reached approximately 40,225 tonnes, with 49% owned by countries outside the Western bloc, compared to 25% in the 1990s.
Investment Flows and Price Outlook
Physically-backed gold exchange-traded funds saw record inflows of $89 billion during 2025, with the SPDR Gold Trust reaching physical holdings of 1,073 metric tonnes by early 2026, a three-year high.
Major financial institutions have raised gold price forecasts. Goldman Sachs projects $4,900 per ounce by December 2026, while J.P. Morgan forecasts prices pushing toward $5,000 per ounce by the fourth quarter of 2026, with $6,000 possible longer term.
For silver, some analysts project prices could reach $100 per ounce in 2026, with more aggressive forecasts suggesting $175+ under scenarios of continued supply deficits and strong industrial demand. Silver analyst Alan Hibbard stated: “I’m expecting silver to perform better in 2026 than it did in 2025 (+147%). I wouldn’t be surprised to see the price of silver increase by over $100 per ounce (to $175+).”
However, some analysts urge caution. The macro backdrop for 2026 appears more balanced than 2025, with central bank buying potentially moderating at elevated prices, much of the global interest rate cutting cycle already priced in, and the possibility of easing geopolitical tensions.
Geopolitical Factors and Resource Nationalism
Ongoing geopolitical tensions continue supporting safe-haven demand for precious metals. Recent U.S. military actions in Venezuela and threats against Iran have contributed to market uncertainty.
China’s silver export controls are part of a broader pattern of “resource nationalism,” where countries seek to control critical materials for strategic advantage. The controls place silver on similar regulatory footing as rare earth elements, which China has also restricted.
Evelyn Partners analyst Daniel Casali noted that both the U.S. and China are attempting to gain leverage through control of critical resources, with China placing export controls on multiple strategic metals, including tungsten and antimony, alongside silver.
What Happens Next
Several factors will determine precious metals prices in the coming months:
- Central bank behaviour: Whether China and other central banks continue gold purchases at current elevated prices will signal market support levels. The People’s Bank of China’s monthly reserve reports serve as key indicators.
- Federal Reserve policy: The outcome of the Powell investigation and the selection of his successor (Powell’s term as Chairman ends in May 2026) will influence monetary policy expectations and dollar strength.
- Silver supply dynamics: Implementation of China’s export licensing system and whether global deficits persist amid strong industrial demand from electric vehicles, solar energy, and artificial intelligence sectors.
- Dollar trajectory: Further dollar weakness could amplify precious metals gains, while any strengthening would likely pressure prices.
- Geopolitical developments: Escalation or de-escalation of tensions in multiple global hotspots will affect safe-haven demand.
Analysts generally expect gold to reach in the USD 4,000-USD 5,000 range through 2026, with silver potentially reaching triple-digit prices if supply constraints and industrial demand continue. However, markets remain susceptible to volatility as multiple structural forces reshape global financial markets and commodity flows.