What supported gold and silver’s extraordinary gains in 2025?
Gold’s rise was fueled by a powerful mix of macroeconomic forces and investor behavior. Continued expectations of interest rate cuts by the US Federal Reserve lowered real interest rates, lowering the opportunity cost of holding unyielding bullion. At the same time, the US dollar weakened, making gold more affordable to international buyers. Increased geopolitical tensions, from conflicts in the Middle East to blockades of Venezuelan oil tankers, have fueled demand for safe havens. Continued central bank buying and record ETF inflows supported this rally, as institutions shifted reserves from dollar assets to precious metals.Silver performed even better, thanks to both investment appetite and industrial demand. A structural shortage of supply, now in its fifth consecutive year, has caused significant shortages on the markets. This shortage coincided with rising industrial use of solar energy, electric vehicles, electronics and AI infrastructure, driving consumption to record highs. Meanwhile, silver’s official listing as a critical mineral for the US, China’s strict export controls and strong ETF inflows added to pressure on available stocks. The combined impact of monetary easing, investor momentum and real demand pushed precious metals to historic highs.
Will gold rise to $5,000 an ounce and silver test $100 by 2026?
By 2026, gold could soar to the $5,000/oz mark. Major banks, Bank of America ($5,000), JP Morgan ($5,055), Goldman Sachs (~$4,900) and UBS (targeting $5,000 in Q3 and up to $5,400 in a bull case) predict significant upside amid rate cuts, a soft dollar, central bank buying and geopolitical risks. Survey data shows that nearly 70% of institutional investors expect gold to rise, while 36% predict the value of gold will cross the $5,000 mark by the end of 2026.
Silver is not far behind, with strong momentum pointing toward a test of the $100/oz level. Tech outbreaks, structural supply shortages and rising demand for green technology and industry are the main drivers. While consensus forecasts are in the $70-90 range, multiple bullish scenarios project silver reaching (or even exceeding) $100 if macro conditions remain favorable.
Demand and price prospects in India With global bullish momentum continuing into 2026, the Indian bullion market is poised for further strength, especially as INR weakness adds another layer of support. Local gold prices could rise to Rs 1.50 lakh per 10 grams in the next 12 to 18 months, fueled by persistent macroeconomic stress and structural factors. The devaluation of the rupee reinforces this trend, making imported gold and silver more expensive in local terms, increasing domestic prices and attracting investors looking for currency hedging opportunities.
Physical demand is likely to remain robust due to strong seasonal purchasing and the growing trend of precious metals as a means of preserving household wealth. Moreover, Indian policy reforms – such as allowing pension funds to invest in gold ETFs – are widening demand channels and increasing institutional gold ownership. With central banks, retail consumers and industrial users all contributing, physical offtake should remain elevated through 2026, strengthening domestic prices amid global tailwinds and a softer rupee.
Investor strategy for 2026
For those who already own gold and silver, the outlook remains broadly positive, supported by global monetary easing, geopolitical uncertainty and structural demand. However, after the spectacular rally of 2025, caution suggests a balanced approach: book partial gains to safeguard gains while maintaining core positions as a hedge against volatility and inflation.
Preferred investment modes depend on individual objectives. For long-term wealth preservation, physical gold and silver remain attractive, especially in India, where cultural affinity and festive demand persist. For liquidity and ease of trading, gold ETFs and mutual funds offer benefits including transparency and lower storage costs. Silver exposure can be diversified through ETFs or futures for those comfortable with higher volatility. Systematically investing in gold through monthly plans can also smooth out price fluctuations.
In short, investors should avoid chasing short-term peaks and adopt a disciplined strategy: maintain a strategic allocation to precious metals, use dips for accumulation and leverage paper instruments for flexibility. Gold and silver will continue to shine, but smart positioning will determine success in 2026.
(Hareesh V is head of commodity research at Geojit Investments)
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