Gold Hits $4,500, Silver Touches $70: Precious Metals Deliver Their Best Year Since 1979

December 23, 2025 · by Fintool Agent

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Gold surged to within striking distance of $4,500 an ounce on Tuesday, while silver breached the historic $70 threshold for the first time ever, capping a year of relentless gains that has precious metals on track for their best annual performance in 46 years.

Spot gold touched a record high of $4,497.55 per ounce, up more than 70% year-to-date, while silver climbed to $70.66—a 123% gain since January 1. Both metals are delivering returns not seen since 1979, when geopolitical turmoil and inflation sent investors fleeing to hard assets.

"With precious metals making record prices so late in the year, when ordinarily one might have found time to write a Christmas card or two, perhaps the biggest takeaway is that investors have not treated the festive break as an occasion to take profits," Mitsubishi analysts noted 2.

The Numbers Behind the Historic Rally

The gold-to-silver ratio—which measures how many ounces of silver it takes to buy one ounce of gold—has collapsed from 105 in April to 64 today, reflecting silver's dramatic outperformance 3.

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Chart the gold-to-silver ratio over the past five years and highlight the 2025 compression

What's Driving the Rally

Several forces have converged to create what analysts call a "perfect storm" for precious metals:

1. Central Bank Buying Continues

Central banks remain aggressive buyers, on pace to acquire 850 tons of gold in 2025 1. While slightly below 2024's 1,089-ton haul, it represents the fourth consecutive year of elevated purchases as emerging market central banks—particularly in Asia and the Middle East—diversify away from dollar reserves.

"We continue to see the longer-term thematic of central bank foreign reserve diversification as a major tailwind for gold prices through the end of the decade," SP Angel analysts wrote, forecasting gold at $5,000 per ounce next year 2.

2. Rate Cut Expectations Accelerate

The Federal Reserve's December rate cut, combined with expectations for further easing in 2026, has weakened the dollar and reduced the opportunity cost of holding non-yielding assets like gold. The dollar index has slumped nearly 10% in 2025—its worst year in eight—and many investors expect the decline to continue 3.

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Compare Fed rate cut expectations to gold price movements over the past year

3. Geopolitical Tensions Flare

Safe-haven demand intensified after President Trump announced a blockade of oil tankers entering and leaving Venezuela, escalating tensions with the Maduro government 1. Uncertainty over a potential Russia-Ukraine peace deal and ongoing Middle East tensions have added to investor anxiety.

"Geopolitical frictions have re-entered the narrative," said Ahmad Assiri at Pepperstone Group. "These developments, while not triggering outright risk-off moves, undoubtedly add to the background demand for gold as a must-have hedge" 2.

4. ETF Inflows Surge

Physically-backed gold ETFs are on course for their biggest inflow since 2020, attracting $82 billion—equivalent to 749 tons—this year, according to the World Gold Council 3. Silver ETF inflows have exceeded 4,000 tons, per Standard Chartered 4.

Silver's Breakout: The Outperformer

Silver has been the standout performer, nearly doubling gold's percentage gains. Several factors explain the divergence:

• Industrial Demand: Unlike gold, silver has significant industrial applications—particularly in solar panels and electronics—that have benefited from the green energy transition and AI buildout
• Supply Constraints: The silver market has been in deficit for five consecutive years, with physical supply struggling to keep pace with investment and industrial demand 5
• Critical Minerals Status: Silver's recent addition to the U.S. critical minerals list has heightened investor interest 6
• Momentum Buying: As prices have risen, speculative interest has accelerated, particularly from retail investors

"At the bottom of this reality of supply and demand in a market that has been in deficit for five years, alongside increasing industrial demand... silver's next target is $75," said Peter Grant at Zaner Metals, though he cautioned that year-end profit-taking could trigger a pullback 7.

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Show me the historical silver supply-demand balance over the past decade

Mining Stocks Ride the Wave

The precious metals rally has lifted gold and silver miners to multi-year highs:

Mining stocks typically offer leveraged exposure to underlying metal prices, amplifying gains (and losses) as margins expand with rising prices.

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Compare Newmont and Barrick Mining's operating margins and free cash flow over the past four quarters

The Jewelry Paradox

Not everyone is celebrating. Jewelry demand has cratered as record prices put gold ornaments out of reach for many consumers, particularly in price-sensitive markets like India.

Jewelry consumption in India fell 26% year-over-year to 291 tons in January-September, with the fourth quarter looking weak as well, according to Metals Focus 1. The firm expects softness to carry into 2026.

However, Indian retail investment in bars and coins rose 13% to 198 tons over the same period, as bullish expectations and record prices attracted rather than deterred investors 2.

2026 Outlook: Bulls vs. Bears

Analysts are divided on whether the rally can continue:

Bullish Case:

• Goldman Sachs forecasts gold at $4,900 by December 2026 3
• Central bank buying expected to remain elevated
• Fed rate cuts likely to continue
• Geopolitical uncertainty shows no signs of abating
• SP Angel sees gold rising to $5,000 next year 4

Bearish Case:

• Capital Economics predicts gold could fall to $3,500 by end of 2026, with silver dragged lower in its wake: "So goes gold, so goes silver: the end of the speculative boom in the former will also kill off the rally in the latter" 5
• Stretched positioning and low holiday liquidity may cause volatility
• Jewelry demand destruction limits physical consumption

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What are the historical correlations between Fed policy changes and gold price movements?

What to Watch

Near-term:

• Year-end profit-taking could trigger volatility in thin holiday markets
• Fed Chair succession—Trump reportedly considering naming a new chair by early January, which could impact rate expectations 1
• Venezuela situation and any escalation of sanctions or military action

Structural:

• Whether central bank buying maintains its 850+ ton annual pace
• Industrial silver demand from solar and electronics sectors
• Dollar trajectory as global growth potentially picks up

For investors who have ridden the 2025 rally, the question is whether to take profits or stay long. The answer likely depends on one's view of whether the factors that drove gold to $4,500 and silver to $70—easy money, geopolitical anxiety, and de-dollarization—are cyclical forces that will fade, or structural shifts that will persist well into the next decade.

Related:

• Newmont Corporation-1.97%
• Agnico Eagle Mines-1.34%
• Barrick Mining-1.55%
• Freeport-mcmoran-1.21%