Market commentary: precious metals surge, then reverse sharply
Record highs driven by safe-haven demand and global uncertainty
January 2026 was a tumultuous month for the base and precious metals complex, marked by record highs and a subsequent sharp reversal into month end. The surge to all-time highs was driven by a mix of safe-haven demand, supply constraints, and aggressive speculative flows, particularly in Asia, before a sharp month end sell off reset prices.
Gold climbed to a record high of $5595 per ounce, up 29.5% for the month supported by a number of factors, including geopolitical risk from the continuing conflict between Russia and Ukraine, and uncertainty around US intentions in Venezuela, Greenland and Cuba. Prices also rose on the back of central bank buying, large purchases by blockchain newcomer Tether, as well as expectations the US dollar will remain weak, potential expansion of the US tariff regime, and several high profile Supreme Court cases which may challenge decisions made by the US administration.
Silver dramatically outperformed, initially surging through the psychologically important $80–$100 range and briefly trading at a record high of $121.65 per ounce, up 70% for the month. The rally was driven by short-squeeze dynamics, with intense buying from industrial users, and strong retail speculation. Platinum and palladium also recorded strong double-digit monthly gains, reflecting concerns over supply tightness and resilient industrial demand.
In the final days of January, sentiment reversed sharply. Fears of an overheated “melt-up,” combined with shifting expectations for Federal Reserve policy and a stronger U.S. dollar, triggered a historic one-day sell-off. Exchanges globally responded by raising margin requirements and warning traders of an overbought market. Silver fell by roughly 30% in its worst session since at least 1980, while gold dropped around 12%, with platinum group metals also sold off sharply.
Despite the correction, most major precious metals remained significantly higher year-on-year. This highlights how January 2026 represented a speculative blow-off top followed by a sudden reality check, rather than a full reversal of the broader upward trend.
Copper and base metals: a volatile repricing after record highs
Base metals are showing a similar price profile, although they are largely playing catch-up. In copper, both producers and consumers were forced to hedge at record price levels above $14,500. The scale of the move to these highs, and the subsequent pullback, was exacerbated by the structure of the options market. Some participants had sold volatility, leaving themselves exposed to sharp price moves in either direction. As prices rose, they were forced to buy; when the market retreated, they were forced to sell, amplifying volatility.
In the short term, downstream physical markets have weakened, and recent poor fundamentals are evident in the collapse of the copper curve. The market has shifted from significant backwardation, which signalled tight supply, to a wide contango, indicating looser conditions and rising inventories. We do not expect this weak downstream outlook to improve until China returns from its Lunar New Year holiday, which begins on 13 February, with normal activity likely resuming only in late February or possibly March.
These near-term headwinds, particularly the destocking in China in response to higher prices and the associated inventory builds, are likely to keep prices subdued. However, the medium-term outlook remains positive. We believe the market is entering a paradigm shift driven by broader structural factors. This transition has involved the unwinding of speculative excess, resulting in sharp retracements from last week’s highs. Nevertheless, several positive drivers are expected to support the market over the coming months and years, including:
- Re-globalisation and the remaking of global supply chains to ensure supply security: this has caused bottlenecks where inventory is ‘locked up’ in certain locations causing shortages elsewhere (silver and copper the most obvious examples).
- AI/renewables demand cycle: this is probably more about psychology right now (with respect to AI) but the rapid growth of solar power has been an important factor, particularly for silver, but also for tin and aluminium.
- De-fiatisation: it’s not only about dollar weakness, it also about the same concerns being levelled at every major currency other than the Swiss Franc, i.e. aging populations, excess debt and ongoing fiscal deficit. An argument to own hard assets.
Over the coming weeks, we expect heightened volatility, with sharp price swings testing bullish conviction. Nevertheless, we believe the market has undergone a paradigm shift and that we are entering a new super cycle.
In this more challenging pricing and trading environment, Marex is well positioned to support clients with market insight, alongside tailored hedging, and risk management solutions across base, ferrous, and precious metals. We offer 24-hour coverage and our online pricing tools, Neon Base and Neon Precious, to help clients access liquidity and navigate these unprecedented market conditions.
To speak to a Marex metals specialist, please contact our team.
Frequently asked questions
Why were metals so volatile in January 2026?
Record highs in precious and base metals were driven by safe‑haven demand, supply constraints, speculative flows and global geopolitical tensions.
What caused silver to outperform gold in early 2026?
Silver’s dramatic rally was driven by industrial players intense-buying, short‑squeeze dynamics and strong retail speculative flows.
Is the metals rally over?
Despite sharp corrections, long‑term structural drivers including re-globalisation, renewable‑energy demand and currency concerns support the potential for a sustained super cycle.
How can Marex help companies manage metals risk?
Marex provides global 24hour execution, bespoke hedging solutions, and digital pricing tools (Neon Base and Neon Precious) to help clients navigate volatility.
