Precious metals experienced notable price fluctuations at the year’s end, with Gold reaching a record $4,550 per troy ounce on Boxing Day. Silver saw a sharp rise, reaching $84 per troy ounce by December 29. Platinum peaked at $2,490, and Palladium reached nearly $2,000 per troy ounce. The price surges were partly due to thin liquidity during the holidays. Silver’s boost was further driven by concerns over shortages and low inventories in China.
Prices declined when the year ended, with Silver recording a drop of over $10 on December 29, marking its steepest daily percentage loss in over five years. Increased margin requirements from CME and the Shanghai Futures Exchange led to margin calls, resulting in forced sales. Despite fluctuations, precious metals experienced substantial annual gains. Gold’s price rose by 64.6% year-on-year, Silver by 148%, Platinum by 127% and Palladium by 77.5%.
Gold And Silver Price Surge
As the new year commenced, prices increased once more, nearing the highs seen in late 2025. Gold rose by nearly 3% to $4,450, Silver by 5% to $76.6. US military activity in Venezuela and a disappointing ISM manufacturing index prompted increased demand for safe havens, affecting the US dollar and reinforcing interest in Gold and Silver.
The market is experiencing extreme volatility, as shown by the record precious metal prices in late December 2025 followed by a dramatic sell-off. The Cboe Gold ETF Volatility Index (GVZ) likely surged to multi-year highs during this period, reflecting deep market uncertainty. We must therefore anticipate that wide price swings will continue to be a defining feature in the weeks ahead.
The current rally is being driven by fundamental factors that support higher prices. The recent US military action in Venezuela has increased safe-haven demand, while December’s disappointing US ISM Manufacturing Index, which fell to a 14-month low of 47.1, is pressuring the US dollar. Consequently, Fed funds futures now price in over a 75% chance of an interest rate cut by the end of March, creating a strong tailwind for gold and silver.
Manage Leverage Carefully
Given these conditions, implied volatility on options is exceptionally high, making it expensive to buy calls to participate in further upside. We must remember the lesson from December 29th, when CME’s margin hikes on silver futures triggered forced selling and a price collapse. This serves as a stark reminder to manage leverage carefully and be prepared for sudden, sharp reversals even within a strong uptrend.
In 2025, silver’s 148% gain far outpaced gold’s 64.6% rise, a divergence not seen since 1979. This has driven the gold-to-silver ratio down to a multi-decade low of approximately 54. While momentum currently favors silver, we should monitor this ratio closely for signs of a potential reversion trade, which would favor gold.
