Gold above $4,500, silver with price gains of around 160 percent, and strong inflows into ETFs: The precious metal rally at the end of the year sets new benchmarks and remains supported by geopolitical tensions and a weaker US dollar.
Gold: Record prices and sustained investment hunger for physical gold
Gold marked another all-time high at the end of the year. The spot price rose to as high as $4,540 per ounce, while the most actively traded February futures in New York reached a peak of $4,584 before settling at $4,555 by the end of the week. This puts gold on track for an annual gain of more than 70 percent – the strongest increase since the late 1970s.
This gold rally is mainly driven by strong physical demand. Central banks have significantly expanded their purchases in 2025, while exchange-traded, physically backed gold ETFs are attracting massive new funds. The world’s largest gold ETF, SPDR Gold Shares (GLD), has increased its holdings by more than a fifth this year. According to the World Gold Council, gold ETFs worldwide are on track for their highest net inflows since 2020; as of December 22, new inflows totaled around $82 billion, equivalent to approximately 749 tons.
Market participants also point to the combination of US dollar weakness, falling real interest rates, and an environment shaped by geopolitical conflicts and trade risks. John Feeney of Guardian Vaults in Sydney sees the current phase as characterized by a mixture of physical demand and growing sensitivity to macroeconomic risks – and less by purely short-term speculation.
Gold remains in focus – investors hold positions despite record levels
It is noteworthy that gold quickly made up for the correction after the previous record level in October. At that time, many market observers spoke of overheating when the price marked its then high of around $4,381 per ounce. However, the subsequent consolidation proved to be relatively short before a new upward movement began.
The behavior of investors at the end of the year is also striking. Normally, many market participants use the holiday season for profit-taking and position adjustments. This year, however, analysts are observing that larger outflows from gold products are largely absent. In a market analysis, the research team at Mitsubishi stated that the usual seasonal profit-taking was hardly recognizable this year – an indication that many investors continue to view gold as a strategic core position in their portfolio.
Against this backdrop, several international banks have adjusted their medium-term gold scenarios upwards. Goldman Sachs, for example, assumes in its base scenario that the gold price will continue to rise in 2026 and could be in the range of $4,900 per ounce. The assessment is based on the expectation of additional interest rate cuts in the USA, continued diversification away from the US dollar, and continued demand from central banks and institutional investors.
Silver rally outperforms gold – short squeeze and bottlenecks in the market
While gold marks new records, the development of silver is even more dynamic. The “little brother” of gold has delivered an unprecedented annual performance in 2025: Around 160 percent price increase since the beginning of the year and new record highs characterize the picture. On the spot market, an ounce of silver now costs over 79 USD!
The most recent phase of the silver rally is closely linked to a historic short squeeze in October. At that time, market participants with large short positions came under pressure as prices rose sharply and physical metal became increasingly difficult to obtain. Although inventories in important storage facilities such as London have since been partially replenished, a significant portion of the available physical silver remains tied up in New York, where traders are awaiting the outcome of an investigation by the US Department of Commerce. The possibility of tariffs or other trade restrictions on silver imports is under consideration.
Analysts point out that the paper market – i.e., futures and derivative products – is facing limited physical availability in this situation. Manav Modi, commodity analyst at Motilal Oswal, puts it in a nutshell: Positions on paper ultimately have to be backed with physical silver – and that is precisely where supply is currently tight.
In addition, silver is an important industrial material in addition to its function as a precious metal. Applications in photovoltaics, electronics, artificial intelligence, and electromobility ensure a robust demand base in the long term. This means that a structural demand overlaps with short-term driven market movements.
Platinum and palladium jump along – precious metals as beneficiaries of geopolitical uncertainty
Other precious metals are also benefiting from the current market situation. Platinum is currently trading at $2,452 per ounce, while palladium is trading at $1,932.50 per ounce. Both metals are mainly used in the automotive industry for catalytic converters, but are also used in the chemical and electronics industries.
Strong fluctuations on individual trading days also underscore the high sensitivity of these markets to changes in sentiment, economic expectations, and supply-side risks. Production risks in important producing countries, changed regulatory requirements in the automotive sector, and substitution effects between platinum and palladium play just as much a role here as the general precious metal sentiment, which is currently characterized by uncertainty and the search for real stores of value.
In summary, the historic rally in gold, silver, platinum, and palladium shows how strongly precious metals benefit from an environment of geopolitical tensions, a weaker US dollar, falling real interest rates, and structural demand from industry and technology. At the same time, the development of silver in particular reminds us that high price levels are accompanied by increased volatility and that the markets can initiate sharp countermovements at any time.
