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Precious metals surge to historic highs
Gold and silver are set to close 2025 with their largest annual price increases in over four decades, capping a volatile year marked by record highs and sharp corrections.
Gold hits all-time peak before year-end dip
Gold prices surged more than 60% over the year, reaching an unprecedented $4,549 (£3,378) per ounce before retreating to approximately $4,330 by New Year's Eve. The metal's rally was driven by expectations of further interest rate cuts, central bank purchases, and investor demand for safe-haven assets amid global economic uncertainty.
Silver follows gold's lead with record rally
Silver mirrored gold's trajectory, peaking at $83.62 per ounce earlier this week before settling near $71. Analysts attribute the surge to industrial demand, supply constraints, and inflows into exchange-traded funds (ETFs). China's recent restrictions on silver exports-aimed at resource conservation-further tightened global supply, drawing attention from industry leaders like Tesla CEO Elon Musk, who warned of potential disruptions to industrial processes.
Central banks and ETFs fuel demand
The World Gold Council reported that central banks worldwide added hundreds of tons of gold to their reserves in 2025, reinforcing demand. Meanwhile, ETFs provided a convenient avenue for investors to gain exposure to precious metals without holding physical bullion, amplifying market liquidity.
Experts warn of potential pullback in 2026
Despite the bullish outlook, analysts caution that the rapid price increases in 2025 could lead to a correction next year. Dan Coatsworth of AJ Bell noted that gold and silver's strong performance makes them vulnerable to profit-taking during market downturns, as investors may liquidate high-performing assets first.
"If financial markets go through a difficult patch, investors looking to liquidate positions might first reach for assets that have delivered strong gains in the past year or so, or ones that are easy to sell. Gold ticks both boxes."
Dan Coatsworth, Head of Markets, AJ Bell
Outlook for 2026: Stability or volatility?
Rania Gule of XS.com anticipates gold will continue rising in 2026 but at a more measured pace. Silver, however, could face sharper corrections after its recent rally, according to Daniel Takieddine of Sky Links Capital Group. Factors such as U.S. interest rate policies, geopolitical tensions, and industrial demand will remain key drivers.
"The market backdrop looks unchanged as we move into 2026. High government debt in the UK and US, along with trade policies and AI market concerns, will likely keep investors bullish on gold and silver."
Dan Coatsworth, AJ Bell
