Introduction to Gold’s Rally
Gold’s blazing rally is set to continue into 2026, driven by central bank demand, interest rate cuts, and simmering geopolitical tensions. The yellow metal, which rose by over 60 per cent to a record high of over US$4,500 per ounce in 2025, is enjoying its biggest annual gain in 46 years. It has also climbed by more than 130 per cent since 2020, outpacing that of the S&P 500 index, which rose by just over 85 per cent within the same period.
Central Bank Demand
Central banks around the world have been aggressively adding gold to their reserves in recent times – a phenomenon triggered by Russia’s invasion of Ukraine in 2022 and the freezing of Moscow’s foreign assets. According to the World Gold Council’s Central Bank Gold Reserves Survey 2025, the banks have accumulated more than 1,000 tonnes of gold in each of the past three years – a sharp rise from the 600-odd tonne annual average over the previous decade. One of the most active buyers is China – the People’s Bank of China has reported 13 consecutive months of gold purchases as at November 2025.
Interest Rate Cuts
The US Federal Reserve lowered rates for a third time in 2025 on Dec 10. While policymakers remain divided over further easing, US President Donald Trump has repeatedly called for lower rates and is also expected to name one of his supporters as the successor to Fed chair Jerome Powell soon. Interest rate cuts have traditionally boded well for non-yielding bullion because they lower the opportunity cost of holding gold, which does not pay interest. Rate cuts also tend to weaken the US dollar, which provides more tailwinds for gold since the metal is priced in dollars.
Geopolitical Tensions
Existing geopolitical tensions may also continue to simmer, prompting investors to seek greater exposure to gold. So far, Mr Trump’s attempts to quell conflicts around the world – including the war in Gaza and the border hostilities between Thailand and Cambodia – have produced inconsistent results, with tensions reigniting even after the peace deals he brokered. Gold has historically rallied during conflicts: it climbed from about US$35 an ounce to US$180 during the Vietnam War between 1965 and 1975, and later surged past US$800 in 1980, at the start of the Soviet Union’s intervention in Afghanistan.
Silver’s Stellar Year
Silver has also had a stellar year, rising by nearly 150 per cent in 2025 to hit around US$72 per ounce at the time of writing – far outpacing gold’s 60-odd per cent gain. Like gold, silver benefits from safe-haven demand, but it also draws support from industrial use. The metal, which is a better conductor of electricity than gold and copper, is widely used in the production of electric vehicles and solar panels.
Bitcoin’s Mixed Year
Bitcoin, which has been dubbed digital gold due to its finite design, has had a mixed year in 2025. Optimism around the launch of the Bitcoin exchange-traded funds and pro-crypto policies in the US pushed its price to a record high of more than US$120,000 in October, but it has since fallen by nearly 30 per cent and was trading around US$87,000 at the time of writing. Still, the world’s largest cryptocurrency is becoming increasingly attractive to institutions.
Conclusion
In conclusion, gold’s rally is expected to continue into 2026, driven by central bank demand, interest rate cuts, and simmering geopolitical tensions. Silver has also had a stellar year, rising by nearly 150 per cent in 2025, while Bitcoin has had a mixed year. As investors seek safe-haven assets, gold and silver are likely to remain popular choices, while Bitcoin’s increasing attractiveness to institutions could lead to further growth. However, geopolitical tensions and interest rate cuts will continue to play a significant role in shaping the prices of these assets.
