Background on Key Figures and Context
The precious metals market kicked off 2026 on a high note, recovering from late-year declines as geopolitical tensions and hopes for a U.S. interest rate reduction fueled investor appetite for gold.
Lukman Otunuga, a senior analyst at FXTM, commented on the positive start to the year for precious metals: “The metals have begun 2026 on a very positive note… Following recent profit-taking in the last days of 2025, bulls appear to be regaining momentum thanks to geopolitical risks and the hope of U.S. interest rate cuts this year.”
Performance of Precious Metals
Spot gold increased by 1.7% to $4,386.99 per ounce on Friday morning, after reaching an all-time high of $4,549.71 on December 26. The previous Wednesday saw it fall to two-week lows.
U.S. gold futures for February delivery rose 1.3% to $4,399.50 per ounce.
Physical demand for gold has seen a resurgence in major markets like India and China, with bullion trading at premiums for the first time in about two months. This upswing is partly due to a recent correction from record highs, boosting retail demand.
Gold bar prices surged 64% in 2025, marking the largest annual increase since 1979. This growth was driven by Fed rate cuts, geopolitical tensions, strong central bank purchases, and rising ETF holdings.
Expectations for Future Rate Cuts
Investors currently anticipate at least two rate cuts by the Federal Reserve (FEDWATCH) of a quarter point in 2026. Non-yielding assets typically perform well in low-interest-rate environments.
Performance of Silver and Platinum
Spot silver rose 4.5% to $74.43 per ounce, following a record high of $83.62 on Monday. Meanwhile, platinum gained 3.7% to $2,130.44 per ounce after hitting an all-time high of $2,478.50 on Monday.
Both metals experienced their best year in history, with silver leading the way at 147% annual gains. This surge was fueled by its designation as a critical mineral for the U.S., supply constraints, low inventories amid rising industrial and investment demand.
Key Questions and Answers
- What are precious metals? Precious metals include gold, silver, platinum, and palladium. They are valued for their rarity, durability, and resistance to corrosion.
- Why are precious metals important in the current market? Precious metals, particularly gold, are seen as safe-haven assets during times of geopolitical tension and economic uncertainty. They tend to perform well when interest rates are low.
- What factors contributed to the strong performance of precious metals in 2025? Key factors included Fed rate cuts, geopolitical tensions, strong central bank purchases, and rising ETF holdings.
- What are investors expecting regarding interest rates in 2026? Investors anticipate at least two rate cuts by the Federal Reserve in 2026, which would support the performance of non-yielding assets like precious metals.
