Gold and silver open strong! Spot gold breaks through $4,350, silver's rally is fierce

Weekly Market Overview for the First Week of 2026

At the start of the new year, the precious metals market experienced a significant rally. According to Bloomberg, gold and silver showed strong performance on their first trading day in 2026, continuing the impressive results of 2025—both gold and silver achieved their best annual gains since 1979.

Spot gold opened with a gap up on Friday ( January 2 ), jumping over $14, and the rally accelerated thereafter. During the Asian session, gold prices briefly touched $4353/oz, with intraday gains approaching $35, demonstrating bullish strength.

Spot silver also performed well, rising 2%, with the silver price reaching a high of $73.00/oz. Palladium and platinum also gained nearly 2%. The US dollar index fell by 0.1%, with dollar weakness providing support for precious metals.

The Drivers Behind High Gold and Silver Prices

Bloomberg analysts pointed out that traders are optimistic about the future of gold and silver, mainly based on expectations of further US rate cuts and a weakening dollar. However, a key short-term risk exists: broad portfolio index rebalancing.

Since gold and silver have already risen sharply, their weights in indices may exceed target allocations, forcing passive index funds to reduce holdings. Senior commodities strategist Daniel Ghali from TD Securities warned in a report: “In the next two weeks, 13% of open silver futures contracts on the NYMEX could be concentrated in sell-offs, leading to rapid price corrections.”

Technical and Trading Logic for Gold

After rising near $4350, gold experienced short-term volatility and profit-taking pressure. From a technical perspective, if gold can hold the key support zones (the recent upward channel lower boundary and previous dense areas) after a pullback, the medium-term trend may continue bullish, with the market potentially evolving into a “strong consolidation followed by another rally” pattern.

Conversely, if rebalancing sell-offs and dollar rebounds resonate, a breakdown below support levels could lead to a “high-level retracement—re-pricing” phase, widening short-term volatility ranges.

In trading terms, gold’s safe-haven and asset allocation attributes make it more attractive for investment under the expectation of stable rate cuts. However, if the scenario shifts to “diminished rate cut expectations, a stronger dollar, and increased risk appetite,” upside space for gold may be limited, and the trend could shift to high-level consolidation.

Silver Trend: Greater Flexibility and Volatility

Due to its dual financial and industrial attributes, silver’s performance in this rally has been more flexible, with market sentiment often amplifying volatility. Currently, silver is trading above $70 and continues to rise, with a strong trend but also more susceptible to capital flow disturbances.

TD Securities mentioned the risk of “significant reduction in COMEX silver positions,” which could lead to a quick short-term pullback: if passive selling intensifies combined with weak liquidity during holidays, silver might experience a scenario where “the decline is faster than gold.”

Structurally, the key for silver is whether it can hold important support levels during a correction (such as previous breakout points and moving averages). If the pullback is limited and quickly stabilizes, it could still evolve into a “high-level strong consolidation,” setting the stage for the next surge. If support is broken, deeper correction risks should be watched, with volatility potentially exceeding that of gold.

Short-term Outlook and Trading Recommendations

In the near term, the market will face two opposing forces: expectations of rate cuts and dollar weakness providing trend support, and index rebalancing along with weak holiday liquidity exerting phased selling pressure.

The likely rhythm for high gold and silver prices is: gold and silver maintaining a strong tone, but with several sharp declines or quick retracements along the way, especially with silver’s expected higher volatility. Investors should focus on changes in US interest rate expectations, dollar trends, and the impact of rebalancing windows on capital flows.