Is the gold and silver rally a bubble? What 2026 could mean for bullion

“It is ludicrous to believe that asset bubbles can only be recognised in hindsight.”

– Michael Burry (The Big Short)

The rally in precious metals has been nothing short of extraordinary in 2025, begging the question about its sustainability.

Gold and silver have not just climbed this year — they have detonated through record after record, turning what began as a steady ascent into a full-blown surge. The yellow metal is up more than 70% in 2025, while silver has stunned markets with gains of nearly 150%.

This week underscored just how heated the move has become. On Wednesday, gold futures on COMEX smashed through the $4,550 per ounce level, while silver vaulted past $72 an ounce for the first time.

With momentum still firmly on the bulls’ side, the inevitable question is no longer why prices are rising, but how much further can bullion go before gravity reasserts itself?

“I think we go higher, but I don’t think there’s too much upside for gold. I think there’s more potential upside in silver, although it’s difficult to put numbers on either,” David Morrison, senior market analyst at Trade Nation, told Invezz.

Still, as the year draws to a close, the risk of a sharp pullback in both metals is growing increasingly hard to ignore.

Gold likely to remain supported

Experts expect gold prices to remain well-supported as markets head into 2026. 

“We believe that gold’s main drivers, including central bank buying, Fed rate cuts, a weaker dollar, concerns about the Fed’s independence, and ETF buying, are all still in place, while the global macro environment remains broadly supportive for gold,” Ewa Manthey, commodity strategist at ING Group, said. 

The market anticipates that US President Donald Trump’s recently announced pick for the next Fed chair will advocate for reduced interest rates.

Manthey said:

Gold is set to achieve its most significant yearly increase since 1979, with a gain exceeding 60%. 

The 1979 surge saw gold prices more than double in a single year, hitting a record peak in early 1980 that held until 2008. 

This historical rally was driven by a confluence of factors, including geopolitical turmoil from the Islamic Revolution in Iran and the Soviet invasion of Afghanistan, alongside double-digit inflation rates in the US.

Case for a higher price in 2026

Some experts believe that it will be difficult to replicate gold’s massive rally year after year, especially after the yellow metal surged 30% in the previous year, meaning it has doubled since February 2024. 

“I wouldn’t be surprised if gold broke back down below $4,000,” Morrison said. 

However, according to Commerzbank AG’s commodity analyst, Carsten Fritsch, there are a number of reasons to expect higher gold prices next year. 

“The most notable of these is the significant easing of monetary policy by the Fed that we expect to happen,” he said. 

Trump is likely to achieve a majority on the Fed Board committed to significantly looser monetary policy next year. A key move is the appointment of a new Fed chair when Jerome Powell’s term ends in May 2026. 

Trump’s economic advisor, Kevin Hassett, a close ally, is the favourite to succeed Powell and is expected to support the president’s desire for lower interest rates.

“We therefore expect the Fed to cut interest rates more sharply than markets anticipate over the course of the coming year,” Fritsch said. 

Central bank gold purchases remain a significant factor, driven by a continued desire to diversify currency reserves. 

While these purchases are unlikely to match the peak volumes of the last three years in the current year, they are still anticipated to be notably higher than levels seen before 2022.

Even though high gold prices have been impeding physical demand, it is likely to be offset by continued robust investment demand. 

Fritsch said:

Silver prices to remain volatile

A record high for silver was reached in mid-October when its price surpassed $50 per ounce for the first time. This was again broken in late November when prices moved to $59.

On December 23, silver prices smashed past the $70-per-ounce barrier, making it the most attractive precious metal of 2025. 

Silver’s price has more than doubled since the start of the year, putting it on track for its most substantial annual rise since 1979.

The gold/silver ratio has significantly come down and is below the five-year average. 

“It is therefore up to everyone to decide for themselves whether silver is still affordable compared to gold,” Fritsch said. 

Silver is often referred to as “gold on steroids” because its percentage movements typically exceed those of gold.

Silver’s smaller market size and dual industrial and investment demand make it highly susceptible to economic cycles. 

Consequently, while silver can significantly surpass gold’s performance in a bull market, it is also prone to steeper declines during an economic downturn.

ING’s Manthey said:

The primary threat to this outlook is centred on the industrial sector. A more significant-than-anticipated global downturn, especially in areas like electronics or manufacturing, could diminish silver’s upward trajectory. 

Furthermore, a sustained period of high prices might also result in a decrease in demand, according to Manthey.

“While we don’t believe that the pace of gains seen this year is sustainable, overall, we expect silver prices to remain well-supported amid the combination of resilient industrial demand, constrained supply growth, and a more favourable macro environment,” Manthey added. 

Both Commerzbank and ING expect silver prices to average around $59 per ounce next year. 

Silver to move in line with gold

“Since silver is no longer significantly undervalued relative to gold, its individual surge is likely to end soon and the price of silver will once again move more in line with the price of gold,” Fritsch said. 

The silver market’s current tight supply situation—which many indicators suggest will continue to be undersupplied next year—will likely remain a factor supporting price increases.

The sharp rise in prices may lead to attempts to reduce costs by decreasing the amount of silver used in industrial applications (known as ‘thrifting’).

The continued viability of reducing silver content in solar cells without compromising their function is questionable, especially since the amount of silver has already been significantly lowered following the price increase to $50 in 2011, according to Commerzbank. 

However, there may still be some leeway for other applications. Industrial demand for silver, which accounts for around 60% of total silver demand, could be curbed as a result.

Physical investment demand (bars and coins), which hit a seven-year low in 2025, is expected to recover. However, silver ETF inflows are unlikely to match this year’s levels, suggesting these two effects may roughly offset each other.

According to Trade Nation’s Morrison, investors ought to be cautious about the rally in silver prices. 

“The thing is that it may have a lot higher to go, but it needs to correct lower first. The issue for investors is that if silver does correct downwards, the move could be so sudden and violent that everyone will be terrified of buying the dip,” Morrison told Invezz. 

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