Key Takeaways
- U.S.–EU tariff escalation pushed gold and silver to record highs.
- Silver is outperforming gold amid safe-haven and industrial demand.
- The Bank of Japan decision could confirm gains or trigger a pullback.
Gold and silver prices have surged to new all-time highs (ATHs).
This rally follows a direct economic confrontation between the United States and Europe.
While geopolitical fears are the current fuel, the upcoming Bank of Japan (BoJ) interest rate decision serves as the ultimate gatekeeper.
It will either cement these precious metals’ gains or trigger a massive correction. Here’s what to expect ahead of the decision this week.
Tariffs Lit the Fuse
The primary driver for the current metal mania is a sudden escalation in trade tensions.
President Donald Trump announced a 10% tariff on goods from eight European nations, effective Feb. 1. The list includes major economies like Germany, France, and the UK, as CCN reported earlier.
The justification is unconventional: these nations opposed U.S. plans to acquire Greenland.
Trump warned that rates could climb to 25% by June if no agreement is reached. This “Greenland Tax” has spooked global markets. Investors are fleeing traditional equities and the U.S. dollar, seeking refuge in “hard money.”
Here is how it impacted gold and silver prices:
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Gold (XAU/USD): Broke past $4,600 to hit a record high of $4,689.39.
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Silver (XAG/USD): Surged over 4%, peaking at a historic $94.08.
Why Metals Are Exploding
Precious metals thrive on uncertainty. These new tariff threats create two specific types of fear:
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Trade War 2.0: Markets fear a retaliatory spiral. The EU is already discussing levies on €93 billion of U.S. goods. This threatens global growth.
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Inflationary Pressure: Tariffs typically raise consumer costs. If the Federal Reserve must balance high inflation against a slowing economy, gold becomes the preferred hedge.
Silver is outperforming gold on a percentage basis. Specifically, over the past year, Silver’s price has increased by 198%.
Gold, on the other hand, has surged by 76%.
This disparity happened because silver benefits from its dual role as a haven and a critical industrial metal. However, its rapid climb to near $95 has analysts warning of a “speculative mania.”
However, veteran market analyst Michael Oliver believes that Silver’s price hitting $90 does not mean that it is now a bubble.
According to him, the metal’s price has the potential to hit between $300 $500 in the next couple of months.
“Silver is stating to us in long-term momentum and its relative valuation levels that it’s going to entirely new reality. And I’m going to suggest the following. In the next handful of months, expect to see silver in the couple hundreds and quite possible $300 to $500,” The analyst said.
Silver Price Analysis
Silver trades near $93.45 on the 4-hour chart and continues to trend higher within a rising channel.
Price action remains bullish, with higher highs and higher lows showing that buyers are still in control.
Recent consolidation near the upper boundary suggests digestion rather than rejection.
Key Fibonacci levels reinforce the bullish structure.
Silver is holding above the 0.786 retracement near $86.98, which has become a strong support zone.
Below that, the 0.618 level around $81.37 marks the next central area where buyers are likely to defend.
Trend indicators confirm strength. The Supertrend remains supportive below the price, and the rising channel continues to guide momentum higher.
At the same time, the Chaikin Money Flow (CMF) is positive and elevated, which signals steady capital inflows and sustained participation.
As it stands, silver remains in a healthy uptrend. A break above the recent highs would open the path toward the psychological $100 level and higher extension targets at $114.76
Until then, sideways movement near the highs appears to be consolidation within strength rather than a sign of exhaustion.
For Gold, Oliver noted that it probably still has higher targets, noting that a run toward $8,000 could be possible this cycle.
“We’re in far different conditions than we were then in terms of the fundamental, macro, and technical. I don’t think it’s going to stop there, but I think just as a reference point, think about that. Another eightfold move, big deal, $8,000,” Oliver added on the Money Metals podcast.
Gold Price Prediction
At the time of writing, gold trades near 4,672 on the 4-hour chart and continues to press higher within a well-defined rising channel.
As seen below, the price has respected the trend structure throughout January, with higher highs and higher lows confirming sustained bullish control.
The recent push above the mid-$4,600s shows buyers remain active on shallow pullbacks.
Fibonacci levels align closely with the trend. Gold is holding above the 0.786 retracement at 4,578, which is now strong support.
Below that, the 0.618 and 0.50 levels near 4,490 and 4,429 mark deeper pullback zones, but the price has not shown acceptance there.
As long as gold remains above the rising channel midline and the 20-period EMA, the trend stays intact.
Momentum is stretched but still constructive. The Commodity Channel Index (CCI) is elevated, indicating intense upside pressure.
However, it also warns of short-term consolidation or brief pullbacks. Overall, the structure favors higher metal values.
A break and hold above the recent highs would open the path toward the 4,800 area and beyond. In a highly bullish scenario, gold’s price could reach $5,010.
However, if demand stalls, this prediction might not happen. In that scenario, gold might decline to $4,490.
Regarding this development, CCN spoke with Farzam Ehsani, CEO of cryptocurrency exchange VALR.
According to Ehsani, the current market condition looks very uncertain. As such, traders might not increase their exposure to risky assets such as Bitcoin and other cryptocurrencies. In turn, this could drive higher prices for silver and gold.
“Macroeconomic risks continue to mount: precious metal prices are rising, silver is hitting new highs, and investors are wary of heightened geopolitical tensions, whose trajectory is difficult to predict, particularly given Donald Trump’s unpredictable actions. Under these conditions, traders prefer not to increase exposure to risky assets,” Ehsani said.
The Bank of Japan: The Breakout’s Judge and Jury
While the U.S.-EU trade spat provided the spark, the Bank of Japan (BoJ) holds the extinguisher.
The BoJ is widely expected to raise interest rates from 0.5% to 0.75% this Friday. This move would bring Japanese rates to a three-decade high.
“10-Yr Real Yield in Japan is only 25 bps, with a 3% inflation rate and more spending. I’m guessing real rates could rise much further???” Michael J. Kramer strategist and founder of Mott Capital opined .
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The Current Stance: The BoJ raised the policy rate to 0.75% in December 2025. Most economists expect the bank to hold rates steady this week to assess market trends and the impact of the weakening yen.
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The “Breakout” Factor: If the BoJ delivers a surprise hawkish signal or hints at a move toward 1.0% in Q2, it could strengthen the yen and potentially trigger a “de-risking” event that erases the current breakout in precious metals.
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Inflation Pressure: With core inflation persisting near 2%, the BoJ faces pressure to move away from its traditionally slow pace of hikes, though fiscal health concerns (240% debt-to-GDP) remain a significant deterrent.
The Bullish Case
If the BoJ hikes rates and signals a hawkish path, it could weaken the “Yen Carry Trade.”
For years, investors borrowed cheap Yen to buy U.S. assets—a stronger Yen forces them to liquidate their positions.
In a chaotic “risk-off” environment, capital often flows directly into gold.
Furthermore, if Japanese bond yields (JGBs) continue to rise, it signals a global shift away from fiat currency stability, pushing gold toward the $5,000 psychological barrier.
The Bearish Case
Conversely, the BoJ could “buy the rumor, sell the fact.” If Governor Ueda suggests that this is the final hike for 2026, the Yen might weaken again.
A resurgent U.S. dollar would make gold and silver more expensive for international buyers. If the BoJ emphasizes economic stability over inflation fighting, the “panic bid” in metals could evaporate as quickly as it appeared.
Key Analysis: Is This a Structural Shift?
We are witnessing more than just a price spike. We are seeing a structural rebasing of precious metals. Several factors suggest the highs may hold:
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Central Bank Accumulation: Central banks are buying gold at record paces to diversify away from the dollar.
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Fed Independence: Recent investigations into Fed Chair Jerome Powell have raised concerns about political interference, further eroding trust in paper assets.
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Silver Scarcity: Industrial demand for silver in green energy remains inelastic, even as prices approach $100.
Key Points for Market Observers
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Safe Haven Demand: Trump’s Greenland-linked tariffs have turned the EU from an ally to a trade adversary overnight.
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Volatility Ahead: Expect extreme price swings leading up to Friday’s BoJ meeting.
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The $5,000 Target: Analysts at J.P. Morgan and Citi now view $5,000 gold as a realistic target for late 2026 if trade wars intensify.
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Silver’s High Beta: Silver will likely continue to move 2x to 3x faster than gold, providing higher returns but significantly higher risk.
Final Outlook
The market is currently pricing in a worst-case scenario for global trade.
Gold and silver are the only beneficiaries of this chaos. However, the BoJ remains the “wild card.”
A surprise pause or a dovish tone from Tokyo could trigger a massive long squeeze, sending gold prices back to support levels near $4,400.
For now, the trend is undeniably bullish. The era of cheap money is ending in Japan, and the era of trade peace is ending in the West. Gold and silver are simply reflecting that new reality.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
