In a historic trading session on Friday, December 26, silver prices shattered records by crossing the $77 per ounce mark for the first time ever. Simultaneously, gold surged to a fresh all-time peak, leading a broad-based rally across the precious metals complex driven by expectations of U.S. Federal Reserve interest rate cuts and escalating geopolitical tensions.
Unprecedented Price Surges
Spot silver skyrocketed by 7.5% to $77.30 per ounce, after touching an unprecedented high of $77.40 earlier in the day. This remarkable move caps off a staggering 167% year-to-date gain for the white metal, fueled by a combination of structural supply deficits, its recent designation as a U.S. critical mineral, and robust investment inflows.
Not to be outdone, spot gold climbed 1.2% to $4,531.41 per ounce, having earlier set a new record of $4,549.71. U.S. gold futures for February delivery settled 1.1% higher at $4,552.70. Gold is now on track for its most powerful annual performance since 1979, supported by central bank purchases, ETF inflows, and global de-dollarization trends.
Drivers Behind the Rally
Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, highlighted the key factors. "Expectations for further Fed easing in 2026, a weak dollar, and heightened geopolitical tensions are driving volatility in thin markets," he stated. Markets are currently pricing in two rate cuts for 2026, with the first anticipated around mid-year. Speculation that U.S. President Donald Trump could appoint a dovish Fed chair is reinforcing expectations for a more accommodative monetary policy.
The U.S. dollar index was poised for a weekly decline, making dollar-denominated gold more attractive for international buyers. On the geopolitical front, news of U.S. airstrikes against Islamic State militants in northwest Nigeria, announced by Trump on Thursday, added to the safe-haven demand.
Platinum and Palladium Join the Party
The rally was not confined to gold and silver. Spot platinum jumped 9.8% to $2,437.72 per ounce, after reaching a record high of $2,454.12. Palladium surged 14% to $1,927.81, hitting its highest level in over three years. Every major precious metal logged significant weekly gains, with platinum recording its strongest weekly rise on record.
Market Outlook and Physical Demand
Grant sees further upside, noting, "$80 in silver is within reach by year-end. For gold, the next objective is $4,686.61, with $5,000 likely in the first half of next year." However, he cautioned about the risk of profit-taking before the year closes, even as the underlying trend remains powerfully bullish.
The picture for physical demand showed mixed signals. In a key market like India, gold discounts widened to their highest in more than six months as the relentless price rally dampened retail buying interest. Conversely, in China, discounts narrowed sharply from the five-year highs seen just last week, indicating some renewed buying interest at lower local premiums.
This historic surge across precious metals underscores a profound shift in investor sentiment, combining macroeconomic policy expectations with a flight to safety, setting the stage for a potentially volatile and lucrative period for commodity investors.
