Gold and silver prices experienced a dip on the last trading session of 2025, concluding a year of extraordinary gains with a bout of volatility. Despite the year-end stumble, both precious metals are poised to close the books on their most impressive annual performance since the late 1970s.
A Banner Year for Haven Assets
The monumental rally throughout 2025 was fueled by a powerful combination of factors. Investors sought safety in haven assets like gold amid escalating geopolitical tensions. Concurrently, successive interest rate cuts by the United States Federal Reserve lowered the opportunity cost of holding non-yielding bullion. This was further amplified by the "debasement trade," where fears over persistent inflation and soaring debt levels in major economies drove capital into tangible assets.
In the gold market, this trifecta triggered a surge of investment. Retail buyers and institutional fund managers poured money into gold-backed exchange-traded funds (ETFs), while central banks around the world continued a multi-year purchasing spree to diversify reserves.
Record-Breaking Performance and Volatility
Gold has surged approximately 64% over the past 12 months. Its climb reached a pivotal moment in September 2025, when it surpassed an inflation-adjusted peak that had stood for 45 years, originally set in 1980. That earlier record of US$850 was achieved during a period of intense U.S. currency pressure, high inflation, and a looming recession. This time, the bullion's ascent saw it smash through the psychological US$4,000 barrier in early October.
"In my career, it’s unprecedented," remarked John Reade, chief strategist at the World Gold Council. "Unprecedented by the number of new all-time highs, and unprecedented in the performance of gold exceeding the expectations of so many people by so much."
Silver's performance was even more spectacular, notching an annual gain of nearly 150%. Its rally was driven not only by speculative fervor but also by robust industrial demand, as the metal is critical for electronics, solar panels, and electric vehicles. After hitting a record in October due to U.S. tariff concerns and a market squeeze, silver passed that peak again in November, propelled by U.S. rate cuts and speculative buying, particularly from China, topping out above US$80 earlier this week.
Year-End Swings Prompt Exchange Intervention
The final days of trading were marked by extreme turbulence. Spot gold edged below US$4,320 an ounce on December 31, while silver slid toward US$70. This followed a pattern of wild swings in thin post-holiday trading, including a sharp plunge on Monday, a recovery Tuesday, and another drop Wednesday.
This volatility prompted significant action from the CME Group, the exchange operator. CME raised margin requirements on precious metals futures twice in a matter of days. Higher margins force traders to post more cash to maintain their positions, which can cool speculative fervor by pressuring some participants to scale back or exit trades.
"The key driver today is the CME raising margins for the second time in just a few days," explained Ross Norman, CEO of Metals Daily. He noted that the increased collateral requirements are effectively "cooling the markets off."
Despite the turbulent finish, 2025 will be remembered as a historic year for precious metals, with gold and silver delivering their strongest annual returns in over four decades, a feat not seen since 1979.
