(Kitco News) - Gold and silver markets ended 2025 with their best gains since 1979 and appear to be starting the new year on a positive note, even as prices appear to have topped out in the near term.
In shortened holiday trading this week, gold prices pushed to a new record high of nearly $4,550 an ounce; however, the precious metal was unable to hold its momentum after the CME raised margins earlier in the week, forcing investors to put up higher collateral to hold positions in gold, silver, platinum, and palladium futures.
A the same time, low holiday trading volume has created some volatility in gold, with prices ending the week down more than 4%, marking the metal’s biggest selloff since November 2024. However, the yellow metal has managed to find new support around $4,330 an ounce heading into the weekend.
Silver is struggling more than gold, as it has seen significantly more profit-taking after the CME tamped down speculative interest. Silver prices are looking to end the week down nearly 9%, their biggest weekly decline since May. Heading into the weekend, spot silver is trying to hold support around $72 an ounce.
While gold and silver are seeing elevated volatility and profit-taking, analysts expect the precious metals to remain in robust uptrends.
“The largest bull market in commodities in recorded history may come with a catch,” said Philippe Gijsels, Chief Strategy Officer at BNP Paribas Fortis, in a comment to Kitco News. “It will not be a straight line up. And from time to time, there may be violent corrections. Currently the precious metals’ complex is very overbought. So a 10+ percent correction may happen at any time just because momentum temporarily collapses under its own weight.”
Although gold and silver are struggling in the near term, analysts expect the precious metals to remain well supported as the U.S. dollar continues to weaken. The U.S. Dollar Index is looking to close the week around 98 points.
“The primary catalyst for gold remains the real rates–dollar dynamic,” said Rania Gule, Senior Market Analyst at XS.com. “The dollar index remains around 98.3 points, posting an annual decline of roughly 9.5%, which has reduced pressure on dollar-denominated commodities. At the same time, the benchmark real yield, measured through instruments such as the 10-year TIPS, stands near 1.92%, a level that continues to define the opportunity cost of holding a non-yielding asset like gold.”
In a note Friday, Christopher Lewis, Senior Market Analyst at FXEmpire, said that while gold prices appear to be overbought in the near term, he expects dips to continue to be bought.
“It’s just far too strong a market. I don’t think that changes anytime soon, and therefore, I like the idea of buying dips and have no real interest in shorting with this kind of momentum still prevalent,” he said in his note. “Longer term, based on the triangle at the very least, we should be looking at $4,900. I don’t think that’s a huge surprise if we get there. I think the market is pretty hell-bent on trying to get to the $5,000 level. That doesn’t mean it happens overnight. That could be a summertime thing. It could even be a fall thing. But the reality is that I do think the buyers are still very much in control here.”
With the holidays officially wrapped up, markets are expected to return to normal trading conditions but could see further volatility due to key labor market data. Some economists note that this will be the first clean employment data since the U.S. government shutdown that lasted through October for 43 days.
“We look for job gains to stabilize at around the 50k mark over the last two months, with private payrolls printing a 50k gain in December as the government likely shed 10k jobs over the same period,” said economists at TD Securities.
Markets will also be paying attention to ISM manufacturing and service sector PMI data next week.
Economic data to watch next week:
Monday: ISM Manufacturing PMI
Wednesday: ADP Nonfarm payrolls, ISM Services PMI, US JOLTS job openings
Thursday: US weekly jobless claims
Friday: US Nonfarm payrolls, University of Michigan Consumer Sentiment survey
