Gold and Silver Bid Farewell to Their Best Year in Half a Century Amid Decline

SadaNews - Gold and silver prices fell on the last trading day of 2025, although they remained on track to record their largest annual gains in nearly half a century, marking the end of an exceptional year for precious metals.

Gold stabilized in spot trading near $4,320 per ounce, while silver slid towards $71. The two metals experienced sharp fluctuations in thin liquidity trading after the year-end holiday, as they dropped significantly on Monday before recovering on Tuesday, only to decline again on Wednesday. These violent price movements prompted the CME Group to raise margin requirements twice.

A Golden Year for Precious Metals

The metals are set to achieve their best annual performance since 1979, driven by strong demand for safe-haven assets amid rising geopolitical risks and interest rate cuts by the U.S. Federal Reserve. Additionally, what is known as "value erosion trading"—resulting from inflation fears and escalating debt burdens in advanced economies—has accelerated the notable ascent.

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In the much larger gold market, these factors have led investors to flock toward gold-backed exchange-traded funds, while central banks continued their years-long buying spree.

A Fertile Environment for the Rise of Gold and Silver

Gold has risen by about 63% this year. In September, it surpassed its inflation-adjusted peak recorded 45 years ago when pressures from the U.S. dollar, high inflation, and signs of a looming recession drove prices to $850 per ounce. This time, prices broke through the $4,000 level in early October.

John Reed, a seasoned market expert and chief strategist at the World Gold Council, stated: "This has never happened in my professional career; this is unprecedented in terms of the number of new record peaks, and unprecedented regarding gold's performance exceeding the expectations of many people to this extent."

Silver achieved gains of over 140% during the year, driven by speculation as well as industrial demand. The metal is widely used in electronics, solar panels, and electric vehicles. In October, silver surged to a record level amid tariff fears that pressured imports into the U.S., tightening the London market and igniting a historical squeeze.

Silver then surpassed that peak the following month, propelled by the U.S. interest rate cuts and intensified speculative enthusiasm. The upward trend peaked above $80 earlier this week, partially driven by increased buying activity in China.

Why Have Gold and Silver Prices Declined?

The recent move reflected quickly, and the market closed down 9% on Monday before swinging in the following two days. In response to the sharp fluctuations, CME Group again raised margin requirements on precious metals contracts, meaning that traders would need to deposit more liquidity to maintain their existing positions. Some speculators may have to reduce or exit their positions, putting downward pressure on prices.

Silver Bounces Back Supported by Supply Shortages Following the Largest Loss in 5 Years

Ross Norman, CEO of Metals Daily, a pricing and analysis site, said: "The main reason for today's movements is CME raising margin requirements for the second time in a few days." He added that higher collateral requirements "contribute to calming the markets."

What About Platinum and Palladium?

The wave of optimism for gold and silver extended to the overall precious metals group in 2025, as platinum broke out of a years-long stability to record a new peak.

The metal heads towards its third consecutive annual deficit, following disruptions in South Africa (one of the major producers of the metal), and supplies are likely to remain tight until there is clarity on whether President Donald Trump's administration will impose tariffs.

Prices for silver, platinum, and palladium all fell on Wednesday, despite no signs of waning enthusiasm.

Charu Chanana, senior market strategist at Saxo Markets in Singapore, said: "The surprise of the year was how safe-haven metals turned into high-momentum trades, especially silver."

Silver dropped 7.1% to $70.83 per ounce by 3:20 PM New York time. Gold fell 0.5% to $4,317.41 per ounce, while the Bloomberg Spot Dollar Index showed little change.