Precious Metals Extend Powerful Rally as Macro and Geopolitical Risks Intensify

Precious Metals Performance:

Precious metals have delivered an exceptional start to the year, with gold briefly trading above USD $4,620 per troy ounce (oz) and silver breaking the $93oz level.

Silver’s year to date gain has been particularly remarkable, having returned 30% thus far, making fresh highs alongside gold’s momentous rally. Platinum and palladium have also advanced considerably, underscoring broader strength across precious metals and the commodities complex as a whole.

These strong returns follow a historic rally seen throughout 2025 where gold, silver and platinum finished 2025 up roughly 65%, 146% and 125% in USD terms respectively.

The recent moves in precious metals are captured in the chart below (Figure 1), which tracks the full 25-year secular bull market in gold and silver.

Figure 1: USD Gold and Silver Price (Jan 2000 – Jan 2026)

Sources: LBMA, RBA, ABC Bullion

Several key drivers are responsible for the ongoing surge in precious metal markets. These are outlined below in some detail:

U.S. CPI and Rate Cut Expectations:

The U.S. inflation backdrop has begun to shift slightly from sticky to subdued. Recent U.S. CPI data as of December 2025 showed inflation cooling to 2.6%, with median, mean and core inflation at 3.0%, 2.9% and 2.6% respectively. Although still above the feds 2% target, inflation pressures are showing early signs of easing, given three consecutive months of falling CPI figures.

This has rapidly boosted rate-cut expectations, with markets pricing in the potential for two or more Federal Reserve rate cuts in 2026, perhaps beginning as early as June with traders currently pricing in a 70% probability of at least 25 basis points of cuts.

Historically speaking, lower real rates and a softer USD have been clear catalysts for precious metals markets. Falling rates in the U.S provide a highly supportive environment for precious metals (Figure 2) as investors shift away from lower yielding assets like cash and bonds toward assets with higher capital growth potential.

Figure 2: Gold in USD & US Fed Funds Effective Rate (Dec 1969–Jan 2026)

Sources: LBMA, RBA, ABC Bullion, U.S. Department of Treasury

Geopolitical Risks:

Geopolitical risk continues to be a dominant price driver for precious metal markets.

The recent developments in Venezuela, escalating tensions in the Middle East, question marks over Greenland and the continued conflict between Russia and Ukraine are only amplifying risk.

Investors are increasingly pricing a fractured geopolitical landscape into asset prices, given drastic U.S. foreign policy shifts and the potential impact of multiple ongoing conflicts on trade routes and global supply chains.

These developments have reinforced the safe-haven hedge appeal of precious metals, particularly given the supportive macroeconomic backdrop.

Rising Risk in Equities:

J.P Morgan forecasts a positive outlook for global equities in 2026, supported by “robust earnings growth, lower rates, declining policy headwinds and the continued rise of AI.” However, the bank also highlights rising risks, including “elevated market concentration” and a deepening “K-shaped” post-COVID recovery, both of which are likely to drive higher equity market volatility in the short to medium term.

These concerns are amplified by a fragile macroeconomic backdrop marked by lingering inflation pressures and an increasingly unstable labour market.

Against this backdrop of heightened macro uncertainty, investors may increasingly rotate toward more defensive allocations, with safe haven flows into gold historically coinciding with periods of elevated equity volatility.

Commodity Market Strength:

Beyond precious metals, the broader commodity complex has shown robust strength in recent times. Industrial metals including copper have also recently hit all-time highs ($5.92/pound), as tightening supply constraints meet a structural upward shift in demand that is being driven by the ongoing thematics of electrification and the global renewable energy transition.

The convergence of a robust commodity market, dovish monetary policy expectations, rising equity market and geopolitical risks provides a compelling narrative for precious metals as we continue through 2026.

In this environment of heightened macro uncertainty, gold and silver can be expected to function not only as inflation hedges or tactical investments, but as core portfolio holdings that provide growth potential, as well unique diversification qualities, and risk protection given their absence of credit risk and exceptional liquidity.

Thank you for choosing ABC Bullion

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Market and Business Analyst, ABC Bullion

^{Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.}