Gold prices pulled back from record levels as softer U.S. inflation data and a strengthening dollar created headwinds for the precious metal. Despite this retreat, the underlying bullish sentiment for gold remains intact, supported by safe-haven demand stemming from political pressure on the Federal Reserve.

Market Performance Overview

The precious metals market showed mixed signals, with gold experiencing a temporary pullback while silver demonstrated remarkable strength. The divergence between the two metals highlights different market dynamics at play in the commodities sector.

Factors Influencing Gold Prices

Several key factors contributed to gold's retreat from its recent peak. The softer U.S. inflation data provided some relief to investors concerned about persistent price pressures, while the stronger dollar made gold more expensive for holders of other currencies. However, these bearish factors were partially offset by ongoing political pressure on the Federal Reserve, which continues to drive safe-haven demand for precious metals.

Silver's Record-Breaking Performance

Silver outperformed gold significantly, surging to a record high above $89. This exceptional performance underscores the metal's industrial demand characteristics combined with its precious metal attributes. The surge represents a notable milestone for silver, which has historically traded in gold's shadow.

Investment Bank Projections

Citi has issued ambitious long-term price targets for both precious metals, projecting gold could reach $5,000 and silver $100. These projections reflect the investment bank's bullish outlook on precious metals amid ongoing economic uncertainties and monetary policy considerations.

The combination of technical factors, safe-haven demand, and institutional projections suggests continued interest in precious metals despite near-term volatility. The bull trend remains intact according to market observers, supported by fundamental drivers including Federal Reserve policy uncertainty and broader economic conditions.

Gold and silver achieved record highs on Tuesday as markets responded to weaker-than-expected US inflation data and continued uncertainty surrounding Federal Reserve independence. The precious metals extended Monday's rally amid renewed political pressure on the central bank.

Record Price Levels Reached

Both precious metals hit significant milestones during Tuesday's trading session:

Treasury yields declined following the latest US inflation data, which showed signs that price pressures are gradually abating. This development particularly benefits precious metals, which do not pay interest, making them more attractive when yields fall.

Federal Reserve Independence Concerns

The Trump administration has escalated attacks on the Federal Reserve, with Chairman Jerome Powell stating that potential indictment threats represent a continuation of attempts to pressure the central bank. These developments have revived what markets term the "sell America" trade, causing the dollar to drop on Monday while Treasuries sold off across the yield curve.

David Wilson, director of commodities strategy at BNP Paribas SA, noted that with Powell's tenure as Fed Chair ending in May, uncertainty over Fed independence and US interest rate trajectory will remain a key gold market driver for much of 2026. The attacks on Fed independence helped propel gold to successive record highs last year, alongside heightened trade and geopolitical risks and central bank buying.

Silver's Momentum Continues

Silver has emerged from a record-setting year, with significant gains occurring in the second half when a historic short squeeze gripped global markets. A speculative frenzy in December propelled silver to successive highs, driven by:

• Speculative flows and momentum-oriented trading
• Concerns over US tariffs
• Renewed uncertainty about Fed independence
• Retail investor interest in portfolio diversification

Ole Hansen, a strategist at Saxo Bank A/S, emphasized that much of the activity stems from speculative flows, particularly momentum-oriented traders who chase strength upward but quickly reduce exposure when prices decline.

Market Outlook and Structural Changes

Citigroup Inc. has issued bullish forecasts for both metals:

Citi analysts expect the bull market to remain intact in the near term, though they anticipate eventually moderating geopolitical risks may weigh on hedging demand later in the year, particularly for gold.

CME Group announced significant operational changes effective Tuesday's close, shifting margin calculations for gold, silver, platinum, and palladium futures from dollar amounts to percentage-based notional values following the price surge and volatile trading. The exchange will also launch a new 100oz silver contract on Wednesday to facilitate greater retail investor participation.

Jin Hennig, global head of metals at CME Group, stated that silver increasingly appeals to retail traders seeking diversification across metals amid geopolitical uncertainty and the energy transition. Other precious metals also participated in Tuesday's rally, with platinum and palladium posting gains alongside the record-setting performance in gold and silver.