Precious metals have kicked off 2026 riding a wave of historic gains from 2025, with gold and silver posting their strongest annual performances in more than four decades as investors and central banks increasingly turn to hard assets amid global economic uncertainty.
Gold Posts Strongest Annual Gain Since 1979
Gold closed 2025 with gains of approximately 65%, marking its best annual performance since 1979 when it surged 133% during the height of the oil crisis.
The yellow metal ended the year near $4,310 per ounce after reaching a record high of $4,549.71 earlier in December. As 2026 trading began, gold quickly extended its rally above $4,360 per ounce, signaling continued investor appetite for the safe-haven asset.
The metal’s annual average price came in at $3,435 per ounce in 2025, representing a 44% increase from 2024 and the strongest year-over-year average gain since gold’s price doubled in 1980.
This performance significantly exceeded analyst expectations, with gold beating consensus forecasts by more than 25% according to industry surveys.
Silver Steals the Spotlight With 144% Surge
While gold captured headlines, silver emerged as the true star performer of 2025. The white metal surged an extraordinary 144% to close the year near $72 per ounce, marking its sharpest annual gain since 1979 when it jumped 435%.
Silver briefly touched an all-time high above $83 per ounce during late December trading before settling back.
Silver’s exceptional performance reflected its unique dual role as both a precious metal and an industrial commodity.
The metal benefited from surging demand across multiple sectors including solar energy, electric vehicles, artificial intelligence infrastructure, and data centers.
This industrial demand coincided with the fifth consecutive year of supply deficits, creating a powerful price catalyst.
The silver market faced particularly tight physical conditions throughout 2025, with stockpiles in major trading hubs like London reaching decade lows.
Reports indicated that some market participants resorted to air freight rather than traditional cargo shipping to meet delivery obligations, while overnight borrowing costs for silver spiked to annualized rates above 200% during periods of acute shortage.
Central Banks Drive Structural Demand
A fundamental shift in central bank behavior provided crucial support for gold prices throughout 2025.
Central banks worldwide purchased more than 1,000 tonnes of gold annually for the third consecutive year, approximately double the historical average from the previous decade.
This sustained buying represents a structural change in how sovereign institutions manage their reserve portfolios.
Emerging market central banks led this accumulation trend, with countries including China, Poland, India, and Turkey substantially increasing their gold holdings.
China’s central bank resumed purchases in late 2024 after a six-month pause, while Poland expanded its gold reserves to reach 21% of total holdings, exceeding its stated target.
This central bank demand reflects growing concerns about dollar asset concentration and geopolitical risk.
Following the freezing of Russian foreign reserves in response to the Ukraine conflict, many nations accelerated efforts to diversify away from dollar-dominated holdings.
Gold offers central banks a politically neutral reserve asset that cannot be frozen, sanctioned, or devalued by policy decisions in Washington.
Investment Flows Return to Precious Metals
After several years of subdued interest, Western investors returned to precious metals with renewed conviction in 2025.
Gold exchange-traded funds recorded their strongest inflows since 2020, with approximately 250 tonnes flowing into ETFs globally during the year.
Silver-backed investment vehicles attracted even more dramatic interest, with 95 million ounces added to ETF holdings by mid-year alone, surpassing the full-year 2024 total.
This resurgence in investment demand coincided with growing concerns about government debt levels, persistent inflation risks, and escalating geopolitical tensions.
Trade policy uncertainty, particularly surrounding tariff implementations and reversals during the year, drove episodes of heightened safe-haven buying across precious metals markets.
Federal Reserve Policy Supports Rally
The Federal Reserve’s pivot toward monetary easing provided an important tailwind for precious metals throughout 2025.
The central bank implemented three interest rate cuts during the year, reducing the opportunity cost of holding non-yielding assets like gold and silver.
Lower real interest rates traditionally boost precious metals by making them more attractive relative to interest-bearing alternatives like Treasury bonds and money market funds.
Market expectations for additional rate cuts in 2026 continue to provide support for precious metals prices.
Economic data showing mixed signals about growth momentum, including weakening consumer confidence alongside resilient GDP figures, has reinforced beliefs that the Fed will maintain an accommodative stance in the year ahead.
Platinum and Palladium Join the Rally
Other precious metals also posted exceptional gains during 2025. Platinum surged more than 110% as years of underinvestment and supply constraints combined with improving demand to drive prices above $2,000 per ounce.
Palladium gained approximately 100% despite facing headwinds from the automotive industry’s transition toward electric vehicles, which require different catalytic converter technologies.
Outlook for 2026 Remains Bullish
Major investment banks and analysts maintain optimistic price forecasts as 2026 begins. JPMorgan Chase projects gold could reach $5,000 per ounce by the fourth quarter of 2026, with potential for $6,000 longer term. Silver forecasts are equally ambitious, with some analysts suggesting the metal could approach $100 per ounce if current supply-demand dynamics persist.
Several factors underpin this bullish outlook. Central bank gold purchases are expected to remain elevated as reserve diversification continues.
Industrial silver demand should stay robust given the metal’s critical role in emerging technologies. Meanwhile, geopolitical uncertainties show no signs of abating, with ongoing conflicts and policy uncertainties likely to sustain safe-haven demand.
The gold-to-silver ratio, which measures how many ounces of silver equal one ounce of gold, compressed significantly during 2025. This shift reflects silver’s outperformance and suggests the market is recognizing the metal’s value proposition amid supply constraints and expanding industrial applications.
Key Risks and Considerations
Despite the strong momentum, several factors could challenge precious metals in 2026. A successful implementation of pro-growth policies could accelerate economic expansion and reduce geopolitical risk, potentially leading to higher interest rates and a stronger dollar that would pressure gold and silver prices.
Additionally, a sharp economic slowdown could initially trigger risk-off sentiment favoring cash and government bonds over commodities.
Elevated prices also pose risks to consumer demand, particularly in major jewelry markets like India and China where higher costs may dampen purchases. However, investment and central bank demand appear less price-sensitive and could continue providing support even if consumer buying moderates.
Conclusion
The precious metals rally that defined 2025 reflects fundamental shifts in the global economic landscape.
From central banks seeking alternatives to dollar reserves, to investors hedging against policy uncertainty, to manufacturers requiring silver for next-generation technologies, multiple constituencies are driving sustained demand for these ancient stores of value.
As 2026 unfolds, precious metals appear positioned to maintain their relevance in diversified portfolios.
Whether prices continue climbing toward analyst targets or consolidate recent gains, the structural forces supporting gold and silver demand suggest these assets will remain at the center of investment conversations throughout the year ahead.
Also Read
Zillow’s 2026 Forecast: Bad News for Rate Dreamers, Good News for Smart Buyers
Why Millennials Are Staying Renters (And They’re Not Wrong)