Why gold, silver are smashing records to start 2026 after last year’s run
The flood of geopolitical headlines to start 2026 has brightened the outlook for gold and silver, even after last year’s massive run-up for all precious metals. Gold and silver are smashing records to start the new year, with gold this week topping $4,600 an ounce for the first time, and silver breaching $90. The two metals have rallied more than 6% and 22%, respectively, just since New Year’s. On Wall Street, it was already the consensus view entering the year that gold and silver would do well again, albeit not to the extent of last year, given strong structural forces underpinning demand for both: rising central bank demand, a weaker U.S. dollar, and tight supply and demand dynamics, among others. But the nonstop barrage of news out of Washington in recent weeks — from Venezuela to Iran to Greenland, as well as attacks on U.S. Federal Reserve independence — has added to conviction in precious metals, as signs of a more interventionist U.S. government drive investors into safe haven assets. “It’s just the sheer number of geopolitical headlines,” Aakash Doshi, global head of gold and metals strategy at State Street, told CNBC. “And it’s not just that it’s headline noise, but that it could reflect a structural regime shift.” Global shifts Historically speaking, geopolitical shocks have little lasting impact on the stock market, with even the recent ouster of as Venezuela leader Nicolas Maduro failing to faze markets. (To be sure, the major averages are down this week amid the roil of additional political developments from the Trump administration). However, the precious metals market tells a different story, with strategists pinning the recent tactical rally on growing U.S. and global instability. On Wednesday, Ulrike Hoffmann-Burchardi, global head of equities at UBS Financial Services, said gold will reach $5,000 in the coming months — $5,400 in her bull case — amid demand for hedges from macroeconomic and geopolitical worries. She also wrote that gold is the “preferred asset,” over oil, in the event of any escalation of tensions with Iran that could disrupt the passage of oil through the Strait of Hormuz, a vital waterway for global energy transport. President Donald Trump urged Iranians over the weekend to continue protesting against the regime, saying the U.S. is “ready to help.” Trump is reportedly weighing options to take action against Iran. “The oil market has been hesitant to price a risk premium in the recent past, and we expect it to be somewhat oversupplied in the first half of this year,” Hoffmann-Burchardi wrote. “We therefore see gold as the preferred hedge asset at this stage for its diversification potential.” There’s also Trump’s recent aggressive rhetoric on Greenland. On Wednesday, the president said in a social media post that Greenland becoming anything less than a part of the United States is “unacceptable.” Crucial to the near-term rally for gold and silver is that Trump’s attack in Venezuela — and his openness to further potential military force in Greenland and Iran — has investors fearful the U.S. is shifting its global approach to policy to interventionism, a tilt that’s also bound to change other nations’ foreign policy. “If, previously, investors were thinking that the U.S. was more non-interventionist, and that more of the focus was going to be in the domestic arena … you could argue that, well, maybe the doctrine is there’s going to actually be the risk of higher intervention,” Doshi said. As a consequence, other countries could start stockpiling their own reserves of oil, gold and other commodities, said Marko Papic, chief strategist of geomacro strategy at BCA Access. Other concerns, such as Trump’s continued attacks on Fed Chair Jerome Powell, could further upset the financial equilibrium. This week, Citigroup Research’s Kenny Hu upgraded his very near-term price forecasts to $5,000 an ounce for gold and $100 for silver, saying heightened geopolitical risk makes him bullish on the pair. “We expect the bull market to stay intact in the near term amid heightened geopolitical risks (Russia/Ukraine, Iran, Greenland, Venezuela, etc), … and renewed uncertainty on Fed independence,” Hu wrote. — CNBC’s Gabriel Cortes contributed to this report.
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