Gold and silver prices have been on a roller coaster ride in recent days.
After racking up huge gains over the past year to hit all-time highs, precious metal prices fell sharply on Friday and Monday.
Recommended stories
list of 4 itemsend of list
Prices regained some ground on Tuesday, although they remained well below their highs.
Here’s everything you need to know about the recent price movements:
Why have gold and silver prices risen so much over the past year?
Investors value precious metals for their tendency to maintain their value.
They have historically attracted buyers in times of economic uncertainty and geopolitical upheaval.
The return of Donald Trump, a famously unpredictable leader, to the White House has been a factor driving volatility over the past year.
From his tariffs to his pressure on the independence of the Federal Reserve, the country’s central bank, to his threats to seize the Danish autonomous territory of Greenland, Trump has repeatedly struck at orthodoxy, causing unease in markets.
Trump’s unconventional governance has also led to a weakening of the US dollar, further encouraging investors to look for “safe haven” assets that maintain their value.
Between Trump’s inauguration last year and the end of January 2026, gold prices nearly doubled, while silver prices nearly quadrupled.
Some analysts argue that the rise in precious metals prices reflects a deeper crisis of confidence in economic systems around the world after years of high inflation and rising national debts.
The US national debt has risen to $38 trillion, the highest in the world. This is the amount of money the US government owes its lenders, both domestic and foreign.
“In a world where almost all financial activities incorporate credit risk (that of a State, a central bank, an intermediary), gold remains the only asset without a counterparty. It makes no promises, does not pay interest and does not depend on political decisions. It simply exists. And that is precisely why it provides security,” Diego Franzin, head of portfolio strategies at Plenisfer Investments, told Al Jazeera.
“In a system based on record levels of public and private debt, this characteristic takes on unprecedented value.”
Another factor driving demand has been purchases by the central banks of emerging economies, including China and Turkiye, which have been trying to ease their dependence on the dollar.
On Thursday, gold hit an all-time high of nearly $5,595 an ounce, while silver hit an all-time high of nearly $122.
The breakneck rally came to a sudden halt on Friday when gold and silver prices fell about 10 percent and 28 percent, respectively.
The decline continued on Monday, with gold ending the day down about 4.5 percent and silver down about 6.5 percent.
On Tuesday, precious metals gave back some of their gains, with gold up around 3.5 percent and silver around 4.5 percent as of 06:00 GMT.
Why did gold and silver prices plummet?
Analysts disagree on the cause of the decline.
Some have suggested that Trump was responsible for bringing prices back down to earth just as he was responsible for driving the rise.
On Friday, Trump announced that he would nominate Kevin Warsh to lead the Federal Reserve, a choice that was seen as relatively conventional compared to other names on his short list.
The choice of Warsh, a former member of the Federal Reserve’s seven-member board of governors, was welcomed by investors who feared Trump would turn to an ally who would cut interest rates without heeding inflation risks. The US president has been pressuring outgoing Federal Reserve chief Jerome Powell to cut rates.
Trump on Friday also expressed hope for a deal with Iran, after weeks of threats of military action against the Middle Eastern country.
Some analysis has suggested that the prospect of more stable economic conditions and a rising dollar led investors to sell precious metals.
Many analysts, however, have cast doubt on that explanation, arguing that the drop simply reflects the fact that prices had become overvalued.
“The most likely explanation is that precious metals prices collapsed simply because they had already gone parabolic the week before. Once the profit-taking started, it just went through the roof,” Mark Matthews, head of Asia research at Bank Julius Baer, told Al Jazeera.
What will happen next to gold and silver prices?
Predicting the market is an impossible task, but some analysts see precious metals continuing to gain in the medium and long term.
In a note on Sunday, JP Morgan analysts said they expected gold to reach $6,300 an ounce (a 30 percent increase from current prices) by the end of 2026.
“Gold remains a dynamic, multi-faceted portfolio hedge and investor demand has continued to be stronger than our previous expectations,” Gregory Shearer, Jason Hunter, Ali Ibrahim and Ananyashree Gupta said in the note.
Julius Baer bank’s Matthews said investors are likely to resume their purchases of gold and silver once they believe the market has stabilized.
“Their two fundamental factors remain unchanged: the US dollar should continue to depreciate and central banks should increase their gold holdings,” Matthews said.
“The price increase probably won’t be as steep as before, but that’s a good thing.”
