TL;DR summary:
Silver steadied after a 9% one-day drop, the largest in over five years.
Both gold and silver are on track for their best annual gains since 1979.
Central-bank buying, ETF inflows and Fed rate cuts continue to underpin prices.
Silver prices stabilised above $73 an ounce after suffering their steepest one-day decline in more than five years, as investors digested an aggressive bout of profit-taking following a powerful year-end rally. The 9% drop on Monday marked silver’s sharpest daily fall since 2019, briefly rattling sentiment across the precious metals complex.
Gold prices were comparatively subdued, holding broadly flat after recording their largest two-month decline in years. While near-term momentum has softened, both metals remain on track to post their strongest annual gains since 1979, underlining the scale of the move seen across 2025.
Structural support for precious metals remains firmly in place. Central-bank buying has continued at elevated levels, reinforcing gold’s role as a reserve asset amid geopolitical uncertainty and rising fiscal risks. At the same time, sustained inflows into exchange-traded funds have broadened investor participation, while three interest-rate cuts delivered this year by the Federal Reserve have eased the opportunity cost of holding non-yielding assets such as gold and silver.
Silver’s rally, however, has been amplified by additional forces. Speculative demand in China surged in recent weeks, pushing premiums on the Shanghai Futures Exchange to record highs. These elevated premiums signalled acute local demand and contributed to tightness in global supply chains, echoing earlier inventory squeezes seen this year in both London and New York vaults.
Those dislocations helped propel silver sharply higher into year-end, leaving the market vulnerable to a violent correction once momentum stalled. The latest pullback appears to reflect position unwinds rather than a fundamental shift in the outlook.
Looking ahead, analysts expect volatility to remain elevated, particularly in silver, which tends to exaggerate moves in gold during periods of speculative excess. Still, with monetary easing underway, strong official-sector demand and lingering supply constraints, the broader backdrop for precious metals remains supportive as markets move into 2026.
