Lower interest rate cycle + increased hedging demand, how much further can precious metals rise by 2026?

Over the past year, commodities such as gold, silver, and copper have performed remarkably. Since the beginning of 2025, this rally has accelerated, with gold rising a total of 68% by late December, silver soaring 133%, platinum increasing 129%, and copper up 36%. Among them, silver's performance has been particularly impressive, nearly double that of gold. On December 22, platinum and palladium both hit record highs, with platinum reaching $2097 per ounce (the highest since 2008), and palladium breaking through $1800 per ounce.

**The three main drivers behind this rally**

Market analysis generally agrees that the combination of a central bank rate cut cycle, rising geopolitical risks, and structural supply shortages have collectively driven the surge in precious metals.

The Federal Reserve has completed three rate cuts by 2025, and the market expects further policy rate reductions in 2026. Supported by expectations of rate cuts, safe-haven funds have continuously flowed into the gold market. Additionally, geopolitical risk factors such as the escalation of U.S. sanctions on Venezuelan oil have heightened, further boosting demand for safe-haven assets in precious metals.

On the other hand, the price increases of silver and copper are also constrained by supply-side factors. Concerns over potential U.S. tariff adjustments have led global traders to stockpile inventories in advance to capitalize on arbitrage opportunities, resulting in significant tightening of global market supplies.

**Institutional outlook for 2026**

Despite the substantial gains, many top financial institutions remain optimistic about the future. Goldman Sachs predicts that the global central bank demand for gold will remain strong in 2026, and if the Federal Reserve continues to cut rates by a total of 50 basis points as expected, gold prices could surge to $4900 per ounce. Even more boldly, Bank of America forecasts a target price of $5000 per ounce for gold in 2026.

Silver warrants particular attention. MarketGauge strategist Michele Schneider states that the gold-silver ratio still has significant downside potential, indicating that silver has a stronger rebound potential relative to gold. The firm projects silver reaching $75 per ounce in 2026, and any price pullback should be viewed as a buying opportunity. French bank BNP Paribas even speculates that silver could reach $100 per ounce by the end of 2026.

Regarding copper, Citibank believes that the pattern of ample U.S. inventories leading to shortages elsewhere will continue, and copper prices are expected to reach an average of $13,000 per ton by Q2 2026.

Overall, the ongoing rate cut cycle and geopolitical uncertainties provide a fundamental basis for medium-term gains in precious metals. Especially, silver, due to tight supply and room for a rebound, may become the standout performer in 2026.