As 2025 trading nears its close, the global precious metals market has once again witnessed historic movements.

On December 26, international gold and silver prices simultaneously hit record highs, with London spot gold peaking at $4,549.9 per ounce. Silver surged even more dramatically, reaching an intraday high of $79.4 per ounce, marking a year-to-date gain exceeding 174%.

This latest surge in precious metals stems from multiple factors: the Federal Reserve's renewed rate cuts and technical balance sheet expansion, intensified de-dollarization driven by trade tariff policies, and the erosion of the dollar's credibility amid U.S. fiscal sustainability concerns.

The silver market, however, faces structural liquidity pressures. Global inventories are being depleted through “robbing Peter to pay Paul” tactics, while industrial demand remains rigid. This, coupled with a surge in futures delivery volumes, has caused spot premiums to skyrocket.

Since 2025, gold has led the precious metals rally, with silver later overtaking it.

The precious metals market's annual trajectory has successively navigated tariff-driven phases, volatile adjustments, rate-cut expectation dominance, and technical corrections. Just as the market anticipated a high-level consolidation to close the year, a fresh wave of gains emerged, setting new historical highs.

On December 26, London spot gold prices broke through the $4,500 per ounce threshold. To date, both COMEX gold futures and London spot gold prices have surged over 70% year-to-date.

Silver delivered even more impressive gains. COMEX silver prices soared for five consecutive trading days from December 19 to 26, climbing from an opening price of $65.44 to a peak of $79.70. Since the start of 2025, COMEX silver futures have accumulated gains exceeding 172%.

Domestic precious metals markets followed suit. Shanghai gold futures rose 62% year-to-date, peaking at CNY1,024 per gram, while Shanghai silver futures surged over 157%, hitting a high of CNY19,215 per kilogram.

In response to the sharp volatility, the Shanghai Futures Exchange (SHFE) issued a notice on December 26 announcing adjustments to trading parameters for gold and silver futures contracts effective at the close of settlement on December 30.

This marks the third adjustment to risk control parameters for precious metals products by the SHFE this month.

According to the latest notice, the adjusted daily price fluctuation limits for gold and silver futures contracts are set at 15%. The margin ratio for hedging positions is adjusted to 16%, while the margin ratio for general positions is set at 17%.

Market analysts noted that the SFE's move aims to guard against market risks during the New Year holiday period. By increasing transaction costs, it seeks to curb excessive speculation and maintain stable market operations.

Multiple factors converge to drive up precious metal prices

First, expectations for interest rate cuts continue to intensify. In 2025, influenced by weak employment data, the Federal Reserve has cut rates three consecutive times, totaling 75 basis points.

In 2026, gold prices are expected to continue benefiting from the liquidity-easing environment brought by Fed rate cuts, with global gold ETF inflows serving as a significant source of buying pressure.

Simultaneously, supply-demand imbalances persist. The strong correlation between silver and gold prices reflects synchronized capital flows within the precious metals sector. Unlike gold, however, silver receives additional support from sustained expansion in industrial demand. Bank of America data indicates the silver market has been in persistent deficit since 2021, with global inventories falling to a decade low.

The global silver market has experienced five consecutive years of supply shortages, with industrial demand growth and the supply-demand gap underpinning silver's long-term price appreciation. Particularly robust demand expansion in photovoltaic, electronics, and medical applications provides solid fundamental support for silver prices.

Additionally, recurring tariff policies and geopolitical conflict risks have persistently elevated safe-haven demand. This, combined with de-dollarization trends, sustained central bank gold accumulation, and speculative capital inflows, collectively supports gold's upward trajectory.

Amid lingering global economic uncertainty and the ongoing trend of “de-dollarization,” central banks worldwide have increased their gold holdings. The fluctuating U.S. tariff policies have not only directly fueled market risk aversion and boosted gold allocation demand but also disrupted global supply chains and trade flows for physical precious metals like silver, intensifying short-term price volatility.

Overall, this bull market is not merely driven by short-term sentiment; precious metals may be transitioning from safe-haven assets to strategic allocation assets.

As 2026 approaches, gold prices are projected to reach new highs. However, considering the significant gains in 2025 and the partial pricing in of the aforementioned factors, the 2026 price increase is expected to narrow to 10%-15%, with the annual price potentially reaching $5,000 per ounce.

Regarding silver prices, metals like silver operate in a smaller market with lower liquidity compared to gold. Should gold experience volatility next year, silver faces a greater risk of correction. It is advisable to implement robust risk management and avoid chasing price increases blindly.

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