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During Asian trading hours on Friday, December 26th, gold and silver prices surged in tandem to new historic highs. Analysis suggests this historic rally in precious metals is extending further, driven by escalating geopolitical tensions and a weakening US dollar.
The spot gold price skyrocketed by nearly $52 intraday, reaching a record high of $4,531.34 per ounce. Heightened friction in Venezuela—where the US imposed a blockade on oil tankers and increased pressure on the government of Nicolás Maduro—further boosted the appeal of precious metals as safe-haven assets. Concurrently, in Africa, according to a social media post by US President Donald Trump, the US launched a "powerful and deadly strike" against a terrorist organization within Nigeria. President Trump stated that the US conducted a military strike against ISIS targets in Nigeria. US Africa Command subsequently confirmed in a statement that the operation was conducted "at the request of the Nigerian authorities" and resulted in the deaths of several ISIS militants.
Spot silver extended its gains for a fifth consecutive session, surging as much as 4.5% and breaking through the $75 per ounce level for the first time. The recent upward momentum in silver has been fueled by speculative fund inflows. Additionally, supply mismatches and disruptions persist at major trading hubs following October's historic short squeeze, providing further support for prices. The Bloomberg Dollar Spot Index, a measure of the dollar's strength, fell 0.8% this week, marking its largest weekly decline since June. A weaker dollar typically provides a supportive backdrop for gold and silver prices.
Year-to-date, gold has accumulated gains of approximately 70%, while silver has surged over 150%; both are on track for their best annual performance since 1979. Support factors for this blistering rally include continued high-level purchases by central banks, inflows into exchange-traded funds (ETFs), and three consecutive interest rate cuts by the Federal Reserve. Lower borrowing costs are beneficial for non-yielding precious metals, and traders are also betting on further rate cuts in 2026. Substantial ETF buying has been a key driver behind the recent surge. According to the World Gold Council, global gold ETF holdings have increased every month this year except May. Holdings in the SPDR Gold Trust, the largest precious metals ETF managed by State Street Corp., have grown by more than one-fifth this year.
Silver's rally has been even more spectacular than gold's. Since the October short squeeze, there have been significant inflows into London vaults. However, a large portion of the world's readily tradable silver remains stranded in New York, as traders await the outcome of a US Commerce Department investigation into whether critical mineral imports threaten national security. This investigation could potentially lead to tariffs or trade restrictions on silver.
