Some will tell you it’s strong industrial and investment demand paired with tightening inventories. Others will point to geopolitical tensions and expectations of further U.S. rate cuts. We say it’s both.
Silver smashed through $75 earlier this week for the first time on record, capping an astonishing 149% rally in 2025. Gold joined the surge, with XAUUSD surging to a fresh all-time high above $4,500. That move marks gold’s strongest annual performance since 1979, with a roughly 70% increase year to date.
At the macro level, the setup has been close to perfect. A softer dollar, mounting rate-cut expectations, and rising geopolitical tensions have combined to lower the opportunity cost of holding metals. At the same time, supply disruptions and thin inventories are tightening the physical market, adding real-world pressure to already aggressive speculative flows.
Yet, silver has an additional advantage: size. It’s a far smaller market than gold, making it easier to push higher. Silver’s total market value sits near $4 trillion, compared with gold’s roughly $30 trillion. In practical terms, it takes far fewer dollars to generate outsized moves in silver.
Those dynamics were especially visible during this holiday-shortened trading week. The weaker U.S. dollar boosted the appeal of precious metals, while expectations of easier U.S. monetary policy in 2026 sparked additional safe-haven demand. Markets are pricing in potential Federal Reserve rate cuts, further reducing the cost of holding non-yielding assets, such as silver and gold.
Geopolitical developments added another layer of support. Tensions between the U.S. and Venezuela intensified after new U.S. sanctions, including a blockade of Venezuelan oil tankers, prompting investors to seek refuge in precious metals amid rising risk sentiment.
Energy markets echoed the same theme. Crude oil prices were on track for their strongest weekly gain since October, supported in part by reports of a U.S. military strike on Islamic State targets in Nigeria, underscoring the broader backdrop of geopolitical uncertainty.
Taken together, the surge in gold and silver is not the result of a single catalyst, but a convergence of forces. Easing monetary expectations, a weaker dollar, tightening physical supply, and escalating geopolitical risk have created a powerful tailwind for precious metals. For silver in particular, its smaller market size has amplified those forces, turning favorable conditions into explosive price action.
