As we enter the final week of December 2025, the fever in the precious metals market has reached a climax. Spot gold briefly touched a record high of USD 4,549 per ounce while silver broke above the USD 80 mark for the first time in history. At the same time, platinum prices have soared more than 22% in just one week and palladium has also hit multi-year highs.

This broad-based surge is the result of macro policy, geopolitics, structural supply–demand forces and market sentiment all resonating at a specific moment in time. It also signals that the fundamental logic underpinning the pricing of precious metals is quietly shifting.

The frenzy has already spilled over to the consumer side. In China, leading jewellery brands have pushed retail gold jewellery prices above CNY 1,400 per gram, with both physical buying and recycling activity booming. However, such extreme gains also come with intense volatility: in Asian trading on 29 December, spot silver initially jumped more than 5% before quickly reversing to a 2% loss, while gold slipped nearly 1%, highlighting how fragile sentiment has become.

Understanding the Logic Behind the Surge

The complexity of this rally lies in the fact that it is not driven by a single factor, but by a multi-layered combination of macro expectations, structural demand and a shift in the underlying pricing paradigm.

The December Fed rate cut, together with expectations of continued easing into 2026, is the most direct macro driver of the move in precious metals. A low-rate environment reduces the opportunity cost of holding non-yielding assets like gold and simultaneously weighs on the US dollar, providing a straightforward boost to dollar-denominated metals.

Although US Q3 GDP data looked strong on the surface, analysts note that the growth has relied heavily on asset price inflation and policy-driven procurement, with structural weaknesses remaining. Markets are more focused on the fact that US public debt has exceeded USD 38.5 trillion, and the so-called “Big and Beautiful” bill is expected to significantly widen the fiscal deficit. Growing concerns about the sustainability of sovereign debt and long-term monetary policy have helped push gold further into the role of a “credit hedge asset.”

Even so, the most solid foundation of this bull market is the wave of “de-dollarisation” gold purchases by central banks. According to the World Gold Council, global central banks made net purchases of 634 tonnes of gold in the first three quarters of 2025, with a net addition of 53 tonnes in October alone, a new high for the year. This strategic allocation – aimed at diversifying FX reserves and hedging US dollar credit risk – provides a long-term and highly stable source of demand for gold.

Unlike gold, silver and platinum are underpinned by robust industrial demand. Silver is widely used in photovoltaics, electronics and electric vehicles, leading to several consecutive years of global market deficits. Platinum, meanwhile, benefits from its role in hydrogen fuel cells and other green technologies.

More recently, silver’s inclusion on the US “critical minerals” list has triggered hoarding behaviour. Combined with already tight global inventories, this has greatly amplified price swings from a trading perspective.

Looking across metals, platinum’s explosive rally has been supported by strong industrial demand, supply-chain concerns and spill-over investment demand from gold. Silver is similarly benefiting from a dual narrative of strong industrial demand + robust investor interest, which explains why its performance has far outpaced gold this year.

The key to this rally is the shift in logic from a simple “interest-rate trade” to a broader “credit repricing” framework.

Traditionally, gold prices have shown a strong negative correlation with US real interest rates. However, over the past year we have often seen US Treasury yields and gold prices rising together – a sign that the traditional relationship has broken down.

Many experts argue that gold’s anchor of value has moved away from the old “US dollar depreciation + falling real yields” model, and is now increasingly driven by a new paradigm centred on: Monetary credit repricing, and Central-bank gold purchases.

At the same time, growing geopolitical fragmentation is magnifying uncertainty in the global economy, further boosting the premium on precious metals as the ultimate safe-haven and credit substitute.

Outlook: Fundamentals for 2026

Looking ahead to 2026, the long-term bull case for precious metals remains intact, but market conditions have clearly changed. Prices are likely to transition into a new phase of high-level consolidation and divergence between metals.

• Long-term support remains solid: global central bank gold buying is unlikely to reverse.

• The Fed’s rate-cut cycle implies a lower medium-term real-rate environment, which is supportive for metals.

• Structural forces such as “de-dollarisation” and geopolitical uncertainty are set to persist.

However, current prices have already more than priced in many positives. Positioning is crowded, and volatility has climbed to historical extremes. Institutions broadly view the near-term risk-reward as unattractive.

• Gold:
  With central-bank buying providing a firm floor, gold is expected to trade in a “hard to fall, harder to surge” high-level range, although annual gains may narrow versus 2025. CITIC Securities forecasts that gold prices could still challenge USD 5,000/oz in 2026, but with gains likely moderating to around 10%–15%.
• Silver:
  Volatility is likely to remain far higher than gold. While its financial side is pulled by the gold trend, industrial demand may face headwinds if growth in solar installations slows. Low inventories and a relatively small market size make silver especially prone to sharp moves.
• Platinum-group metals:
  Their paths may increasingly diverge from gold and silver, with price action more dependent on the recovery in their specific industrial uses and developments on the supply side.

That said, investors must stay alert to the risk of:

• A sudden shift in Fed policy expectations,

• Easing geopolitical tensions that erode safe-haven demand, and

• Profit-taking triggering liquidity shocks in crowded trades.

Chinese exchanges and banks have repeatedly issued risk warnings and stepped up market supervision. For traders, this is not the time to chase prices blindly. Discipline is key: be wary of the high premium and volatility in silver and other high-beta metals, consider waiting for the market to cool before looking for medium-term entries, or use options and other tools to manage risk.

[The views in this article are for reference only and do not constitute any form of investment advice.]