Precious Metals Experience Significant Rally and Subsequent Volatility in 2025; Market Outlooks Vary

Gold and Silver Rally in 2025: A Deep Dive into Market Performance and Future Trajectory

In 2025, gold and silver experienced a notable rally, attracting substantial investor interest. This period was characterized by significant price increases, followed by periods of volatility. Experts and financial institutions have offered varied perspectives on the sustainability and future trajectory of these precious metals.

Market Performance in 2025

Gold concluded 2025 with a 73% increase from the start of the year, marking its strongest annual performance since 1979. Silver experienced an even larger increase, rising by 194% since the beginning of 2025, which represented its best annual performance in decades.

Retail investors collectively invested a net average of $15 million daily into gold and $7 million daily into silver investments throughout the year, according to VandaTrack Research data.

Online discussions also reflected heightened interest, with the SPDR Gold Shares ETF becoming the third most-discussed investment on r/WallStreetBets, and the iShares Silver Trust ETF ranking among the top 20.

Factors Driving the Rally

Multiple factors were cited as contributing to the precious metals rally:

• Economic Concerns: Concerns regarding inflation, tariffs, and the strength of the US economy played a role.
• "Sell America" Sentiment: This sentiment was referenced by some investors and analysts as a factor.

  Jeffrey Christian, managing director at CPM Group, suggested it primarily fueled the rally until late summer.

• Geopolitical Tensions: Rising geopolitical tensions contributed to the perception of gold and silver as safe-haven assets.
• Currency Speculation: Speculation about gold potentially replacing the dollar as a global reserve currency amidst a weakening dollar was also cited.
• Federal Reserve Policy: Concerns regarding the Federal Reserve's independence and signals about continued interest rate reductions also influenced sentiment.
• Industrial Applications: Silver prices also benefited from its industrial applications.

Retail Investor Engagement

The rally saw considerable participation from retail investors. Bullion Exchanges, a New York-based precious metals retailer, reported a doubling of its clientele in 2025.

Eric Gozenput, CEO of Bullion Exchanges, attributed increased interest to the influence of proponents for metals and a "fear of missing out" (FOMO) generated by the rally.

Individual retail investors, such as Jeremy Cerza, indicated plans to reallocate funds from US stocks to precious metals due to perceived volatility. Bilaal Dhalech acquired gold and silver as a hedge against inflation and currency debasement, reporting a 30% gain on his gold ETF holdings. Jesse Gaddis invested in physical metals and ETFs, citing wealth preservation and the 'Sell America' sentiment, later selling approximately half of his silver and gold ETFs to realize profits.

Recent Market Volatility and Decline

Following the significant gains, precious metals experienced volatility. A broad sell-off on a Friday saw gold decline by 9% and silver futures by nearly 30%.

This marked silver's largest single-day drop since 1980.

Some investors attributed this specific sell-off to the nomination of Kevin Warsh as the next Federal Reserve Chair. This decline extended into the following week before a shift in investment strategy on a Monday, moving capital from technology and software stocks to stable assets like gold, led to a rebound in both metals.

As of a specific Thursday, spot gold decreased by 0.7% to $4,926.9 per ounce, reversing gains from the preceding Tuesday (+6%) and Wednesday (+2%). New York spot silver was down 10% to $79.6 per ounce, after increasing by 6% on Wednesday and 7.6% on Tuesday.

Investment Bank Outlook

Investment banks generally maintain a positive outlook for gold:

• UBS strategists described the recent sell-off as "normal volatility within a continuing structural uptrend." They projected gold to reach $6,200 in the following month before settling at $5,900 by year-end, maintaining a long position on the metal.
• Goldman Sachs analysts remained bullish, citing potential upside risks to their forecast of $5,400 per troy ounce by December 2026. This outlook is supported by continued gold accumulation by central banks and increased private investor purchases of gold ETFs as the Federal Reserve implements interest rate cuts.
• Bank of America (BofA) analysts were also bullish on gold, forecasting it could reach $6,000 per ounce in the coming months. They noted some concern regarding the speed of recent price gains and associated volatility, along with uncertainties about the US administration's policy implementation post-midterm elections.

Investment banks expressed more caution regarding silver:

• UBS indicated that silver prices would need to decline further to become attractive, given its high volatility (60-120%). They forecast spot silver to reach $100 in the following month before decreasing to $85 by year-end. UBS also highlighted that over 50% of silver demand is industrial, suggesting that current high prices could lead to reduced industrial demand as end-users seek to optimize usage and lower costs.
• Goldman Sachs analysts were warier of silver compared to gold, citing supply constraints in the London market, described as a "persistent London liquidity squeeze."

  They advised volatility-averse clients to remain cautious.

• Bank of America analysts expressed a somewhat positive outlook but noted potential headwinds, such as a decrease in solar panel consumption. They suggested silver prices had deviated from an estimated "fair value" of $60-70 per ounce, contributing to the recent correction, but still forecast a market deficit, implying eventual price support for the metal.

Indicators for Silver's Future Trajectory

Jeffrey Christian of CPM Group indicated that silver's downturn might continue, even while holding a long-term view that silver could remain elevated or rise through 2026 due to ongoing concerns about inflation, the US dollar, and its role as a safe-haven asset.

He projected a worst-case scenario where the metal's price could fall to $68 per ounce, representing an additional 17% drop from Friday's closing price.

CPM Group is monitoring several indicators to assess the silver market's future direction:

• Trading Activity: A reduction in investor interest and a slowdown in trading momentum, observable in silver prices, bonds, and silver-related ETFs, could prompt speculative traders to exit. Prior to a recent price drop, retail traders had shown significant interest, with record net shares in the iShares Silver Trust ETF and high Turnover Momentum.
• New Silver Supply: An increase in silver inventories could dampen momentum. Reports from The Silver Institute and Metals Focus previously indicated a narrowing supply-demand imbalance, with supply projected to grow and demand to pull back. Christian observed record amounts of silver potentially available from reserves and backlogs at silver refineries, suggesting an impending increase in supply.
• Open Interest in Futures: High open interest in silver futures, particularly active March 2026 contracts on the COMEX exchange (around 500 million ounces), has supported silver's price. A decrease in this open interest could remove a significant source of upward pressure, as investors might not roll their contracts forward.

Concerns and Cautions

Growing concerns exist regarding the sustainability of the rally. Jeffrey Christian projected potential declines of 9% for gold and 31% for silver if market enthusiasm diminishes. Bilaal Dhalech stated he would not be surprised by a near-term 10% correction in both metals. Jesse Gaddis, upon selling some holdings, commented on the potential for quick price decreases after a slow ascent.

Marko Kolanovic, formerly of JPMorgan, expressed caution regarding silver's rally, stating that a 50% price drop was "almost guaranteed" based on historical commodity speculation patterns.

Jose Torres, a senior economist at Interactive Brokers, also noted the risk of the market moving in the opposite direction following significant speculation.