What’s happening in the precious metals market?
Gold has set a new record for volatility against Bitcoin. The price of the precious metal plummeted from a record $5,500 per troy ounce to around $4,500 within a few days, before continuing its upward trend.
Elena Vasilieva delves into the dynamics of the traditional market for low-risk assets and why this should interest crypto investors.
Chronicle: From Records to "Melt-Up"
The end of January marked a parabolic rise in precious metal prices. After surpassing the $5,000 mark at the beginning of the week, gold continued its momentum, reaching an all-time high of over $5,200 per ounce on January 28. Silver exhibited even more explosive growth, soaring to $117.69.
However, by Friday, January 30, the market experienced a sharp cooldown: gold lost over 4%, dropping to around $5,150, while silver fell by 5% to $110 (data from CNBC on January 30, 2026). Ed Yardeni from Yardeni Research described the situation as a "melt-up"—a phase of frenzied, almost vertical growth without pullbacks, characteristic of the final stages of a bull market. Experts linked the sharp correction on Friday to a temporary agreement to prevent a U.S. government shutdown, which triggered profit-taking.
However, this local correction does not change the trend: since the beginning of the year, precious metals have shown double-digit growth. Why is this happening?
Charts of gold and silver growth in January (as of January 30, 2026). Source: Gold Price.
Expert Opinion: When Politics Breaks the Economy
The main drama is unfolding in the U.S., where the executive branch is pressuring the monetary authority (the Federal Reserve) to lower interest rates amid a criminal investigation against Fed Chair Jerome Powell.
Additionally, on January 30, President Donald Trump announced his nomination of Kevin Warsh for the next head of the regulator. Following this, the precious metals market saw another decline.
Ruslan Khaitkulov, a senior lecturer at the Department of Theoretical Economics at HSE University, explained the essence of the conflict simply in a comment to ForkLog:
“Trump is pressuring the Fed to lower rates. This will lead to increased business activity (which is good for him), but also to rising inflation. Containing inflation is a direct task of the Fed, so they resist.”
“When investors see the risk that politicians might pressure bankers, they understand: the dollar could devalue. Gold is rising not because more jewelry is being made from it, but because in turbulent times, investors traditionally turn to gold as a safe haven asset.”
Media Buzz: What Are They Talking About?
We often hear terms like “national debt,” “bonds,” and “deficit.” Usually, they sound like white noise, causing anxiety. Let’s translate them into plain language to understand why people are flocking to gold:
- Budget Deficit — when the government spends more than it earns from taxes.
- National Debt and Bonds. To cover the gap, the government borrows money by issuing bonds (debt securities). It’s like taking a loan from a bank, but the lender is the whole world.
- Fed Rate. This is the cost of money. A high rate means expensive loans, slowing the economy and reducing inflation. A low rate means cheap loans, boosting the economy, but prices rise.
What’s happening now? The U.S. has accumulated a massive amount of debt. Servicing this debt at high rates (paying interest) is incredibly costly, consuming a significant portion of the budget.
There are two possible paths to overcome the crisis. The honest one — cut government spending, trim social programs and military bases, or raise taxes. This option is painful for the economy and extremely unpopular among voters. The second path is inflationary, which markets fear the most. In this case, authorities might try to pressure the Fed to lower rates, even if there are no economic grounds for it. This would make servicing old debts easier, as their real value would decrease, but it would also devalue citizens' savings, rapidly eroding the purchasing power of money.
Gold at $5,200 reflects the market's bet that the second scenario will be chosen. It indicates a lack of trust in the government's ability to pay its debts with honest money.
Historical Context: Has This Happened Before?
The current situation echoes the 1970s. Back then, the U.S. abandoned the gold standard (the exchange of dollars for gold), leading to a decade of stagflation — high inflation with weak economic growth.
In 1971, gold was priced at $35. By 1980, it soared to $850. There was also a political crisis, an oil shock, and a loss of trust in the dollar.
The difference today is the added factor of “world fragmentation.”
“The old trading system is not so much collapsing as it is ‘fragmenting.’ This began during COVID and continues due to geopolitical tensions,” noted Khaitkulov.
Trade wars (tariff threats), Washington's conflict with NATO over Greenland are prompting countries to seek assets that are not dependent on foreign political will. The dollar is a U.S. asset. Gold is an asset that is not subject to foreign political influence.
Silver: A Double Blow
Silver is showing leading dynamics. The gold-to-silver ratio has plummeted from 105 in April to 50. This indicates a fundamental reevaluation of the “white metal.”
🔥This is HISTORIC:
— Global Markets Investor (@GlobalMktObserv) January 21, 2026
The gold-to-silver ratio plunged to 50, the lowest in 14 YEARS.
This means it now takes just 50 ounces of silver to buy 1 ounce of gold, down from ~105 in April 2025.👇https://t.co/mkPv57Qlvz
The market is facing a real shortage. COMEX (London) exchange stocks have fallen to their lowest levels since March last year, losing 114 million ounces. Analysts point to the inability to quickly replenish stocks even at high prices due to a lack of scrap processing capacity.
“The story with silver is similar — it historically moves in tandem with gold as a hedge. But here, the industrial factor adds to the demand,” added Khaitkulov.
Silver is critically important for electronics and green energy production, creating dual pressure on prices: investment demand overlays the industrial need for the metal.
While gold simply sits in storage, silver largely goes into the challenging-to-recycle industrial layer. The combination of panic-driven investor demand and real hunger from factories creates a spring-loaded effect.
Corporate Response and Tokenization
High prices are changing the landscape of the mining industry. Chinese giant Zijin Mining announced its acquisition of Canadian Allied Gold for $5.5 billion. Shares of major miners (Newmont, Barrick Gold) are rising as mining margins hit record highs.
Meanwhile, the financial sector is seeking ways to combine the reliability of gold with modern technology. In Hong Kong, the Hang Seng Gold ETF has launched with tokenized shares on the Ethereum blockchain. This confirms the trend of RWA as a way to simplify access to a “safe haven” for the digital economy.
Goldman Sachs analysts raised their gold price forecast to $5,400, citing the “stickiness” of hedging positions: large capital holders are not rushing to sell the metal even during local pullbacks, fearing long-term macro-political risks.
The Collapse of the Digital Gold Narrative?
While physical gold is hitting historical highs, the crypto market is sending alarming signals. The January rally in precious metals has highlighted an uncomfortable reality for Bitcoin supporters: in moments of genuine political fear, capital chooses the old reliable material over digital code.
Divergence and Loss of Safe Haven Status
Recent events have shattered the myth of Bitcoin as digital gold capable of hedging risks. While the ounce of metal rose amid news about Greenland and the Fed, Bitcoin plummeted below the psychological mark of $80,000, losing 20% from January highs.
Analysts from Nansen and HashKey Group note: the first cryptocurrency behaves not as a safe asset, but as a risky instrument, correlating with tech stocks rather than with bars in storage.
Gold Outperforms Over Time
For the first time in a long while, gold has outperformed Bitcoin in five-year returns: the precious metal has risen by approximately 185% compared to around 164% for the first cryptocurrency.
On January 29, the market valuation of gold increased by $1.5 trillion (comparable to the entire capitalization of Bitcoin), while the crypto market fell below $3 trillion, and the fear and greed index dropped to 26 (“fear”), while for gold it soared to 99 (“extreme greed”).
Threat of a Deep Correction
The loss of the $80,000 support level opens the path to a “double bottom” around $74,000. Analysts at CryptoQuant see signs of investor capitulation, and the RSI metric for the Bitcoin/gold pair has dropped to the lows of bear markets in 2015 and 2018. This could signal either an imminent downturn or a prolonged crypto winter amid the rise of commodity markets.
Investors should acknowledge that Bitcoin is experiencing an “identity crisis” in the current cycle. The narrative of inflation protection has cracked. The only hope for bulls lies in a paradigm shift, voiced by Changpeng Zhao and BlackRock: betting on Bitcoin not as “the second gold,” but as a future global reserve currency that will replace the weakening dollar.
Mirror of Reality
The rally in precious metals is not just an opportunity for speculators to profit. It is a warning signal.
Gold is not rising; it’s the money that is losing value. The price increase to $5,200 indicates that the purchasing power of fiat currencies is rapidly declining. We are witnessing not so much an increase in the wealth of gold holders, but a reevaluation of the value of paper money.
The end of an era of calm. Investors no longer believe in the “safe haven” of U.S. government bonds. If the head of state himself attacks his central bank, the concept of “risk-free asset” disappears.
Technology and antiquity. Ironically, in the age of AI and blockchain, the world is finding refuge in the oldest asset. However, the market is adapting: tokenized gold ETFs are emerging, combining the reliability of the metal with the convenience of cryptocurrencies.