The expectation of a rate cut by the Federal Reserve (Fed) is rising, driven by multiple factors such as central bank buying and tight supply, leading to a strong upward trend in gold and silver prices recently. The spot price of gold has reached a two-week high, while the price of silver has once again hit a historic record.
Goldman Sachs’ latest survey shows that over 70% of institutional investors are bullish on gold, with some expecting the price to surpass $5,000 per ounce by the end of next year.
On Friday, November 28th, the spot price of gold rose by 1.3% to $4,210.94 per ounce, reaching its highest level since November 13th. Gold is expected to rise by 3.6% this week, with a monthly increase of 5.2%, marking the fourth consecutive month of gains.
Silver climbed to $56.78 per ounce, with a daily increase of 6.1% and a cumulative increase of 16.6% this month.
The primary driving force behind this surge in precious metals is the strong expectation in the market for a rate cut by the Fed next month. With Federal Reserve officials making dovish statements and economic data slowing down, traders currently see an 87% chance of a rate cut in December.
In a low-interest rate environment, assets like gold tend to benefit. Gold has already risen by 58.6% this year and broke the $4,000 mark for the first time on October 8th.
Amid expectations of a slowdown in economic growth and rising inflation in 2026, many investors see gold as a hedge against inflation and geopolitical risks, as well as a defense against a weakening US dollar.
Silver, often referred to as the “Devil’s metal” due to its volatile nature, has seen a 71% increase in 2025, surpassing gold, with room for further gains in the future.
The surge in silver is being primarily driven by structural factors:
1. Continuously declining production:
Over the past decade, silver production has been decreasing, especially in Central and South America, due to mine closures, resource depletion, and infrastructure challenges.
2. Surge in high-tech demand:
Despite an overall slight decrease in industrial demand, applications of silver in high-tech areas such as electric vehicles, artificial intelligence (AI) components, and solar panels are increasing. A standard electric car requires about 25 grams of silver, and if solid-state silver batteries are adopted in the future, the demand for silver per electric vehicle could exceed 1 kilogram.
Institutional investors are optimistic about the long-term prospects of precious metals. A survey of over 900 institutional investors by Goldman Sachs showed that 36% of respondents expect the price of gold to reach $5,000 per ounce by the end of 2026.
Overall, more than 70% of institutional investors believe that the price of gold will rise next year.
In this survey, 38% of respondents pointed out that central banks buying gold is a key driver of the rising gold prices. Global central banks favor gold due to its high liquidity, lack of default risk, and suitability as a neutral reserve asset.
While gold remains the most favored precious metal traditionally, silver has outperformed other metals this year in India, a country where about 55% of the population relies on agriculture as a livelihood and where silver is relatively more affordable.
India is the world’s largest consumer of silver, using approximately 4,000 metric tons annually, mainly in jewelry and utensils. Demand for silver peaks during the harvest season and the Diwali festival in India. Farmers tend to view silver as a more reliable savings option than banks and often prioritize purchasing silver after the harvest.
Diwali, a five-day festival celebrated to mark prosperity and good fortune, sees people buying gold and silver on the first day (Dhanteras) as symbols of wealth and prosperity.
In India, the price of silver reached a high of 170,415 rupees per kilogram on October 17th, marking an 85% increase since the beginning of the year.
Paul Syms, head of fixed income and commodity ETFs at Sungje Investment, told CNBC, “From a long-term perspective, the dynamics behind this situation are different from before, which might allow silver to maintain relatively high prices and even continue to rise in the future.”
Due to its high thermal conductivity and higher electrical conductivity than other metals, combined with the increasing demand for electric vehicles, artificial intelligence, and renewable energy, the value of silver is likely to continue to rise.
“Silver bridges the gap between precious metals and industrial metals. With technological advancements – batteries, solar panels – moving towards a more electrified world, silver has excellent application scenarios,” Syms said.