Gold, silver's historic rally could extend on potential dovish Fed signal

Gold, silver outlook for 2026

Market sentiment remained largely cheerful during the Christmas week, with equities touching record highs and both industrial and precious metals posting extraordinary gains. Copper and silver surged to fresh all-time highs, capping an unprecedented rally and closing the week with double-digit gains.

The US dollar edged lower and hovered near the 98 level, pressured by market speculation that President Trump may favour appointing a more dovish Federal Reserve Chair. This outlook, viewed as bearish for the greenback, combined with expectations of a traditional Santa Claus rally, helped push all three major US equity indices toward record highs.

However, the standout performers were undoubtedly metals. Gold and silver surged to new all-time highs, extending a historic year-end rally and heading for their best year since 1979, driven by escalating geopolitical risks, a weaker US dollar, and expectations of easier monetary policy ahead.

On COMEX, gold and silver posted sharp weekly gains of around 3.8% and over 14%, respectively. Gold futures climbed to a record high of $4,581.30 per ounce, while silver futures surged to nearly $79.70 per ounce, marking the largest one-week dollar gain on record for silver. Silver’s parabolic rise has been reinforced by speculative inflows and lingering supply dislocations across key trading hubs following October’s historic short squeeze. SHFE backwardation and expectations of potential export curbs from 2026 have further strengthened the structural bullish outlook.

MCX Gold futures recorded its highest-ever weekly close at Rs 1,39,940 per 10 grams last week, marking the seventh consecutive positive weekly close. Prices continue to trade above the Supertrend (7,3), indicating that the short-term bullish trend remains intact. We expect the bullish momentum to extend into the coming week; however, prices may face initial resistance around Rs 1,42,000, followed by Rs 1,44,000. On the downside, immediate support is seen at Rs 1,36,400, with the next support placed near Rs 1,32,900.

Copper mirrored this strength, posting double-digit gains on the MCX and finishing nearly 13% higher at a record Rs 1,260 per kg. Globally, LME copper prices broke above $12,200 per tonne, while COMEX futures climbed toward $5.90 per pound. Copper also set fresh records on the Shanghai exchange, supported by expectations of a tighter global market heading into 2026 amid mine disruptions and pre-emptive stockpiling in COMEX warehouses ahead of a potential policy review.

Additionally, Chinese regulators have signaled tighter oversight of new copper and alumina projects from 2026, reinforcing expectations of sustained supply discipline. Aluminium and zinc also ended the week higher, gaining around 5% and 3%, respectively.

Meanwhile, WTI crude oil surged above $58 per barrel and was initially set for weekly gains as geopolitical tensions raised concerns over potential supply disruptions. Risks intensified following the US interception of a Panama-flagged supertanker linked to Venezuela, with several loaded vessels currently waiting offshore after Trump announced a blockade on all vessels traveling to and from the country.

Traders also assessed the impact of a US military strike against a militant group in Nigeria. However, oil prices fell more than 2% on Friday, erasing earlier gains, as caution set in ahead of a scheduled meeting between Trump and Ukrainian President Volodymyr Zelensky on Sunday (December 28) to discuss a proposed 20-point framework aimed at ending the Russia–Ukraine war.

Looking ahead, thin holiday trading is likely to exaggerate short-term market moves as investors navigate a relatively light economic calendar. Attention will be on the FOMC meeting minutes and weekly US jobless claims, while markets also await President Trump’s expected pick for the next Fed Chair, a decision that could shape the monetary policy outlook.

As 2025 draws to a close, the broader outlook for commodities appears firmly constructive. Structural supply constraints, tariff-driven trade distortions, and sustained demand from AI infrastructure and renewable energy technologies have combined to reset expectations, particularly for copper and silver. Gold, meanwhile, continues to stand out as a hedge, underpinned by geopolitical risks, trade frictions, and expectations of further interest rate cuts in the year ahead.