Gold Hits $5,000, Silver Soars Past $100, Who Is Behind the ‘Buying Frenzy’?

TradingKey - In early Monday trading, spot gold historically broke through the $5,000 per ounce mark, an achievement coming just over three months after gold prices first topped $4,000 on October 8, 2025. During the same period, spot silver also surged strongly to reach a new high of $109 per ounce.

According to a gold market survey released by Kitco News, Wall Street institutional strategists remain generally optimistic, while retail investors have shown a degree of caution. However, most professional analysts agree that the current gold rally is not a "baseless bubble" but is built on solid fundamentals.

Rich Checkan, President and COO of Asset Strategies International, stated bluntly: "At some point in the future, we might see gold price volatility or a pullback, but I don't think that will happen this week. The geopolitical situation is more complex than ever, and doubts about the Federal Reserve's political independence persist. High stock valuations and upward momentum in some commodities also suggest that gold prices still have room to go higher. The trend is an investor's best friend."

Regarding the silver market, Paul Williams, Managing Director at Solomon Global, expressed optimism about its future trajectory. He noted that the rise in silver prices is driven not only by sustained industrial demand growth but also by retail investor enthusiasm, safe-haven appeal, and an intensifying long-term supply shortage. "The entry barrier for gold prices is too high for some investors, and silver provides a more accessible way to participate in the precious metals market. The potential target for silver prices is expected to reach $120 by 2026."

He added that persistent geopolitical tensions continue to drive silver's safe-haven attributes, while demand for silver in future technological fields such as new energy and artificial intelligence is growing rapidly, with no substantial improvement yet on the supply side. "We believe the supply shortage will persist for some time, which also supports the logic for a medium-term rise in silver."

Analysts pointed out that continuous gold accumulation by global central banks, frequent geopolitical conflicts, and concerns over the credibility of the fiat currency system are working together to reshape investors' long-term value judgments for gold and silver, becoming the three core drivers of this rally.

Central Banks Continue to Increase Gold Purchases

Currently, global central banks are witnessing a new wave of gold reserve expansion. A recent report from the World Gold Council shows that in November 2025, global central banks continued to maintain a net buying stance, with a monthly net gold purchase of 45 tons; although down from October, it remains at a relatively high level for the year.

As of November 2025, cumulative gold purchases by global central banks for the year had reached 297 tons, reflecting a sustained national-level preference for gold as a traditional safe asset. Within this trend, buying from emerging market central banks has been particularly significant, with Poland, Kazakhstan, Brazil, Turkey, and China emerging as major buyers.

Notably, the Polish central bank announced last week that it has approved a plan to add up to 150 tons to its gold reserves; if fully executed, its total national gold reserves would rise to 700 tons.

Regarding China, according to official foreign exchange reserve data released by the People's Bank of China, as of the end of December 2025, China's gold reserves reached 74.15 million ounces, an increase of 30,000 ounces from the previous month. This also means that since November 2024, the Chinese central bank has increased its gold holdings for 14 consecutive months, injecting stable expectations and long-term confidence into the global gold market.

Intensifying Geopolitical Turmoil

Currently, escalating global geopolitical risks have become a key factor driving investors to reassess their allocation to safe-haven assets.

Contradictions between the US and Europe over Greenland have become increasingly prominent. Although US President Trump publicly stated he would not use force to take this strategic Arctic location from Denmark, his intention to control Greenland has not diminished, as he continues to exert diplomatic and policy pressure on the EU to force compromises on related issues.

Meanwhile, Trump continues to maintain a tough stance on trade policy. Recently, he threatened again that if Canada chooses to sign a trade agreement with China, the United States would consider imposing tariffs as high as 100% on its goods. This increasingly evident unilateralist tendency has caused the global market to harbor deeper concerns about the stability of the international trade system.

Market uncertainty brought about by geopolitical tensions is significantly increasing the demand for safe-haven allocations in precious metal assets. Against the backdrop of the ongoing war in Ukraine, the worsening situation in Gaza, and the US crackdown on high-ranking Venezuelan officials, gold and silver prices continue to strengthen.

"Holding gold is not like bonds or stocks that are linked to the debt of others; it is not subject to company performance like stocks," said Nicholas Frappell, Global Head of Institutional Markets at ABC Refinery.

"In today's uncertain world, gold is an excellent risk diversification tool," he added.

Shaking Trust in the US Dollar

Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, said he holds a neutral view on gold prices for the coming week, but from a medium-to-long-term perspective, the fundamental drivers pushing gold higher remain strong.

He stated that recent geopolitical incidents like the situation in Greenland may only be "temporary catalysts," while "the continued softening of the US dollar is the most core supporting force."

Last week, driven by safe-haven buying, the Bloomberg Dollar Spot Index fell 1.6%, marking its largest weekly drop since May last year. This trend makes gold priced in other currencies "cheaper," thereby driving international buying and further strengthening gold's status as a tool against exchange rate fluctuations and inflation risks.

Nikos Kavlis of research consultancy Metals Focus said, "People are clearly moving away from the US dollar, which is very beneficial for gold prices."

However, a deeper impact stems from the structural pressures facing the US dollar system itself.

In recent years, the US has continuously tightened its global governance commitments and pursued a more pronounced inward-looking strategy. Actions such as cutting public investment, strengthening trade barriers, and implementing "long-arm jurisdiction" over overseas dollar assets are gradually eroding the foundation of trust in it as an international reserve currency.

Looking back at the rules-based international order led by the US after World War II, the US provided the world with "public goods" such as security and aid on one hand, and on the other, enjoyed the benefits of low financing costs and high capital returns through the "seigniorage" effect of the dollar as a reserve currency. But today, this structural exchange of "global governance for financial privilege" is being questioned by more and more countries.

Chris Vecchio, Head of Futures Strategy and Forex at Tastylive.com, said that a strong demand for "non-fiat system" assets has appeared in the market. "The dollar no longer carries the foundation of global trust as it did in the past; therefore, investors are looking toward more real, physical assets."

What’s Next?

After a round of fierce gains, the market is beginning to focus on the subsequent performance of precious metals: Have gold and silver prices "overextended" themselves? Is there still room for further upside?

Stephen Innes, a partner at SPI Asset Management, pointed out that the logic behind the gold rally is driven not just by geopolitical conflicts, but more deeply by global public finance issues.

"In a context of expanding fiscal deficits, sustained tests of policy credibility, and central bank reputation gradually giving way to the influence of sovereign balance sheets, investors are more concerned with stability than leverage." He emphasized that even if some geopolitical risks subside in the short term, this macroeconomic structure will not fundamentally change.

Innes added that there are indeed signs of "crowding" in gold trading and it faces skepticism over valuations being considered high, but if prices maintain a structural consolidation pattern—"consolidating rather than crashing"—the strong trend for gold is still expected to continue.

In contrast, the silver market is more volatile.

Andrew Thrasher, Senior Portfolio Manager at Financial Enhancement Group, said the current silver price is "incredible" because it is more than 100% above its 200-day moving average, indicating a short-term overbought market. "Technically, the rubber band has been stretched very tight." He believes that investors and traders are currently reducing positions gradually, and while there is still room for prices to rise further, the movement has become extremely sensitive and overly optimistic.

Despite prices being at historic highs, mainstream Wall Street institutions remain optimistic about the medium-to-long-term trend of gold and have even raised their target prices.

Investment bank Jefferies ( JEF) released the most aggressive forecast, predicting that gold prices could potentially reach $6,600 per ounce within the year.

Bank of America ( BAC) set a short-term target price of $6,000 per ounce. Its analyst Michael Hartnett noted in a report that looking back at past gold bull market cycles, gold prices have risen by an average of 300% within 43 months. If compared to the current trend, it is expected that gold prices will reach $6,000 in the spring of 2026.

Independent analyst Ross Norman expects that the gold price could reach a high of $6,400 this year, with a full-year average price of approximately $5,375. He emphasized that macroeconomic support remains solid—government leverage continues to expand, debt sustainability faces challenges, global central bank gold demand remains steady, and the market is still willing to use gold as a key asset for diversified reserves.

Meanwhile, Goldman Sachs ( GS) also raised its gold price forecast for the end of 2026 last week, from an estimated $4,900 to $5,400. The bank noted that private capital continues to pour into the gold market, competing with central banks for limited resources, a structural change that is reshaping the market ecosystem.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, also stated that while "fear of missing out" (FOMO) is one of the drivers of the current gold rally, the move should not be simply dismissed as market hype. "Macro fundamentals remain solid," he said.

Most analysts say the resilient performance of gold and silver is gradually validating the long-term assumptions of "hard currency believers"—that gold and silver will once again become true safe havens when the credibility of global fiat currencies is under threat.