Gold and silver ended the year with intense swings following a historic rally. Both metals recorded their strongest annual gains since 1979. Trading remained volatile until the final sessions. Investors reacted to interest rate signals, geopolitical tension, and fragile financial markets.
Gold prices jumped more than 60 percent over the year. The metal reached a record peak above 4,549 dollars per ounce. Prices eased after Christmas. Gold traded around 4,330 dollars per ounce on New Year’s Eve.
Silver mirrored gold’s volatility. The metal traded near 71 dollars per ounce at year end. Earlier in the week, silver touched an all-time high of 83.62 dollars per ounce.
Rate cut expectations continue to drive demand
Several factors fueled the surge in precious metals. Investors positioned for future interest rate cuts and strong demand. Analysts warned that fast rallies often raise downside risks. Sharp gains can reverse quickly.
Rania Gule from trading platform XS.com highlighted overlapping drivers. Economic trends, investment flows, and geopolitical tensions combined. These forces pushed gold and silver prices higher throughout the year.
Gule said expectations of further US rate cuts in 2026 played a central role. Central banks steadily increased gold purchases. Investors also turned to safe-haven assets amid global uncertainty and economic stress.
Inflation concerns reinforce defensive buying
Dan Coatsworth from investment platform AJ Bell described strong investor caution. Inflation worries drove capital toward precious metals. Volatile equity markets reinforced this defensive positioning.
Coatsworth said market conditions looked broadly unchanged entering 2026. High government debt weighed on confidence in the UK and US. Tariff proposals linked to Donald Trump added pressure. Concerns over a potential artificial intelligence bubble unsettled markets.
These risks could maintain support for gold and silver. Coatsworth warned that strong performance increased vulnerability. Exceptional gains in 2025 raised the chance of pullbacks.
Rally leaves gold open to profit-taking
Coatsworth said market stress could trigger rapid selling. Investors often liquidate assets with strong recent gains first. Gold fits that profile and trades easily.
Rania Gule expects gold prices to rise further in 2026. She forecast steadier, more controlled growth. Prices may stabilize after the extremes seen in 2025.
Central banks worldwide added hundreds of tons of gold this year. The World Gold Council reported sustained accumulation. Official demand continued to support prices.
Silver supported by supply shortages and industrial demand
Daniel Takieddine of Sky Links Capital Group highlighted silver-specific drivers. Tight supply and industrial demand pushed prices higher. Policy decisions added further pressure.
China announced restrictions on silver exports. The country ranks as the world’s second-largest producer. In October, the Ministry of Commerce confirmed new export controls. Officials cited resource protection and environmental priorities.
Elon Musk reacted publicly to the policy. He warned of industrial consequences. He said many manufacturing processes rely heavily on silver.
Investment funds channel significant inflows
Takieddine also pointed to strong inflows into precious metals. Large sums entered the market through exchange-traded funds. These vehicles widened investor access.
ETFs bundle assets and trade like single shares. Investors avoid handling physical bullion. This structure simplified exposure to gold and silver.
Takieddine said silver could rise again next year. He urged caution despite optimism. Strong rallies may still face sharp corrections.
