Silver Beats Gold as Precious Metals Rally on Rate-Cut Hopes and Global Tensions

ISLAMABAD: Silver surged ahead of gold in a strong rally across the precious metals market on Friday, driven by speculative buying, low year-end trading volumes, and rising expectations that the US Federal Reserve will begin cutting interest rates. Increasing geopolitical uncertainty also boosted demand for safe-haven assets, pushing prices of major metals to fresh record highs.

 Silver Leads the Rally With Record Prices

Silver posted the strongest gains, jumping 3.6% to $74.56 per ounce, after briefly touching an all-time high of $75.14 . The metal has significantly outperformed gold in recent weeks, supported by tight supply conditions and strong industrial demand.

 Gold Climbs to New Highs

Spot gold rose  0.6% to $4,504.79 per ounce  in early trading, after reaching a record peak of  $4,530.60  during the session. Meanwhile,  US gold futures for February delivery gained 0.7% to $4,535.20.

According to Kelvin Wong, Senior Market Analyst at OANDA, trading activity in both gold and silver has been heavily influenced by momentum-based and speculative investments since early December. He highlighted several factors behind the rally, including reduced market liquidity, expectations of prolonged US interest rate cuts, a weakening US dollar, and growing geopolitical risks.

Wong also projected that  gold could move toward the $5,000 level in the first half of 2026,while  silver may climb close to $90 per ounce if current trends continue.

 Best Annual Performance in Decades

Gold is heading for its strongest yearly performance since 1979, gaining nearly  72% so far this year. The surge has been supported by multiple long-term drivers such as:

•  Monetary easing by the US Federal Reserve
• Heavy gold purchases by central banks
•  Rising inflows into gold-backed ETFs
•  Efforts by several countries to reduce dependence on the US dollar

Silver has delivered an even more dramatic performance, soaring  around 158% year-to-date . Its rally has been fueled by persistent supply shortages, its classification as a critical mineral in the United States, and solid demand from industrial sectors such as electronics and renewable energy.

Rate Cut Expectations Strengthen Safe-Haven Demand

Markets are currently pricing in at least two US interest rate cuts next year  a scenario that typically supports non-yielding assets like gold and silver. Lower interest rates reduce the opportunity cost of holding precious metals, making them more attractive to investors.ntum

Ongoing global tensions have further strengthened investor demand for safe-haven assets. Recent developments include a temporary US quarantine on Venezuelan oil exports and renewed US military strikes against Islamic State targets in northwest Nigeria. These events have increased uncertainty in global markets, pushing investors toward precious metals.

Platinum and Palladium Also Surge

Other precious metals recorded sharp gains during the session:

Platinum surged 7.8% to $2,393.40 per ounce, after touching a record high of $2,429.98

*Palladium rose 5.2% to $1,771.14, extending its rally from a three-year high

Both metals, widely used in automotive catalytic converters, are benefiting from supply tightness, tariff-related uncertainties, and a shift in investor interest away from gold. On a yearly basis,  platinum has jumped nearly 165% , while  palladium is up more than 90%.

 Outlook for Precious Metals

With interest rate cuts on the horizon, ongoing geopolitical instability, and strong industrial demand, analysts expect precious metals to remain well-supported in thecoming months. Silver, in particular, continues to attract attention as both an industrial and investment asset, while gold maintains its status as a global store of value during uncertain times.

FAQs 

Q1: Why did silver and gold prices surge recently?

A1: Silver and gold surged due to speculative trading, expectations of US interest rate cuts, a weaker dollar, and rising geopolitical tensions, which increased demand for safe-haven assets.

Q2: How high could gold and silver go in 2026?

A2: Analysts project gold could approach $5,000 per ounce, while silver may climb toward $90 per ounce, based on current market trends and continued demand.

Q3: What other metals are performing strongly?

A3: Platinum and palladium have also posted significant gains, with platinum up about 165% and palladium more than 90% this year, driven by tight supply and industrial demand.

Q4: How do US interest rate cuts affect precious metals?

A4: Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold and silver, making them more attractive to investors.

Q5: How does geopolitical tension impact the precious metals market?

A5: Political instability and conflicts increase uncertainty, prompting investors to seek safe-haven assets such as gold and silver, which pushes prices higher.

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