Gold and silver are set to close out a historic year with massive gains despite a sharp late-December pullback, as analysts remain bullish on both precious metals heading into 2026 amid expectations of lower interest rates, geopolitical uncertainty and sustained demand.
Silver suffered its steepest one-day decline in more than four years on Monday, sliding about 10 percent to roughly US$70 an ounce, its biggest daily drop since 2021. Gold also retreated sharply, falling to its lowest level since Dec. 17 and recording its largest single-day percentage decline since Oct. 21.
The sell-off followed an extraordinary rally that pushed both metals to record highs. Gold surged above US$4,500 an ounce last Friday, while silver traded above US$83 an ounce earlier this week before retreating later in the session.
Prices stabilised on Tuesday, with silver rebounding to around US$74.6 an ounce and gold trading near US$4,371 an ounce by late morning, according to market data.
Despite the volatility, both metals are ending 2025 with exceptional gains. Gold has risen more than 66% over the year, while silver has posted an even more dramatic increase of over 158%, according to Trading Economics.
Analysts say the late-year correction reflects profit-taking after months of uninterrupted gains rather than a reversal of the broader bullish trend.
“Such pullbacks are typical after parabolic moves,” one commodities strategist said, adding that “the underlying fundamentals for both gold and silver remain intact.”
Gold’s rally has been underpinned by expectations that the US Federal Reserve will begin cutting interest rates in 2026, reducing the opportunity cost of holding non-yielding assets. Persistent geopolitical tensions, including conflicts in Eastern Europe and the Middle East, have also reinforced gold’s appeal as a safe-haven asset.
Central bank demand has been another key driver. Monetary authorities, particularly in emerging markets, have continued to accumulate gold reserves as part of efforts to diversify away from the US dollar and bolster financial resilience.
Silver, while benefiting from similar macroeconomic factors, has significantly outperformed gold due to a combination of industrial and investment demand. Strong buying interest from China, tight global inventories and supply constraints have pushed prices higher, analysts say.
Silver’s dual role as both a precious metal and an industrial input has amplified its gains, with rising demand from sectors such as solar energy, electronics and electric vehicles adding to upward pressure on prices.
“Silver has become a proxy for both safe-haven demand and industrial growth,” a metals analyst said. “That combination has been particularly powerful in 2025.”
Looking ahead, market participants expect the supportive conditions to persist into 2026. Anticipated interest rate cuts in the United States are likely to remain a central theme, potentially weakening the dollar and boosting demand for commodities priced in US currency.
Gold prices could rise to $5,000 an ounce next year if rate cuts materialise and geopolitical risks remain elevated, some analysts predict. Silver could climb toward $90 an ounce, supported by continued industrial demand and constrained supply.
However, analysts caution that volatility is likely to remain high, especially after such an exceptional run-up in prices. Any delays in monetary easing, shifts in investor sentiment or improvements in global risk appetite could trigger further corrections.
Even so, many see gold and silver as well-positioned for the medium term.
“The broader narrative hasn’t changed,” a trader said. “As long as uncertainty remains high and real interest rates are under pressure, precious metals will stay in focus.”
For now, gold and silver appear poised to carry their momentum into the new year, even as investors brace for sharper swings after one of the strongest performances on record for the sector.
