Gold (GC=F) and silver (SI=F) have been two of the biggest winners in financial markets this year, with momentum in precious metals trading pushing prices to all-time highs with just days left until 2025.
On Monday, gold prices so far this year exceeded 70%, hitting a record $4,450 per ounce, a year that has hit 50 all-time highs.
Silver prices are set for an even stronger year in 2025, more than doubling since January and hitting a high of $69 an ounce on Monday.
Both precious metals were on pace for their biggest annual gains since 1979.
The precious metal’s gains, driven by strong industrial demand this year and physical shortages linked to tariff concerns, come as investors focus on a range of risk assets – from cryptocurrencies to artificial intelligence trade to European stocks – that are making headlines ahead of an eventful year in 2025.
But gold and silver look set to be the defining trades of the year.
“In the new paradigm, gold is viewed as a currency rather than a commodity,” Shree Kargutkar, senior portfolio manager at Sprott Asset Management, told Yahoo Finance.
“Until central banks around the world return to prudent monetary policy, we see no reason for gold to change its direction,” Kagutka said.
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When it comes to gold, central bank hoarding, purchases of exchange-traded funds (ETFs), a weaker dollar and falling interest rates are the main drivers. Few of these are expected to ease in the coming year.
President Trump is expected to soon announce his replacement for Federal Reserve Chairman Jerome Powell, whose term ends in May, fueling expectations that a dovish Fed and “overheated” policies could further boost prices.
Some Wall Street analysts also believe there is more room to run as central banks continue to be “sticky” net buyers of gold. Goldman reiterated its “structurally bullish” outlook with a price target of $4,900 by the end of 2026, with upside risks if under-allocated private investors add to their portfolios.
UBS expects gold to reach $4,500 by June 2026, driven by falling real yields and continued weakness in the dollar.
The World Gold Council said more fiscal spending, central bank demand and lower interest rates could push gold prices up another 5%-15% next year.
“If economic growth slows and interest rates continue to fall, gold could see modest gains,” Joe Cavatoni, senior market strategist at the World Gold Council, told Yahoo Finance on Monday. “Gold could perform strongly in a more severe recession marked by rising global risks.”
