As we enter the second year of President Trump’s second term in office, the gold rally shows no signs of abating
2026 vs 2025
2025 was such a good year for gold that some investors doubted the momentum could continue. But if the first fortnight of President Trump’s second year is anything to go by, the demand for gold looks set to stay strong, and even grow.
This is because all the key factors that helped push up the price of gold in 2025 remain in place and could deepen further in the new year.
1. Geopolitical risks
Having reached a record high of US$4,540 per troy ounce on 26 December 2025, gold prices briefly consolidated before spiking up again on news of the US’s military actions in Venezuela. Since then, President Trump has continued to up the ante with threatening noises against Cuba, Colombia and Greenland, to name just a few.
It seems unlikely that the clamour for safe haven assets will go away anytime soon given that these latest moves mark a significant re-shaping of the world order, including the possible dissolution of the 76-year-old, 32-member NATO Alliance. For central banks and retail investors alike, gold offers an effective hedge against the inflation shocks associated with such geopolitical uncertainties.
2. Lower interest rates
The US’s latest economic data also continue to point to lower interest rates in 2026. The release of December’s non-farm payrolls (NFP) results last Friday, coupled with recent job openings and turnover data, paint a mixed picture of stalling labour demand but a relatively stable unemployment rate.
Amid this “no hire, no fire” scenario, markets continue to expect one or two rate cuts in 2026. Analysts are also keenly aware of President Trump’s vocal campaign for lower rates and the imminent end of Jerome Powell’s term as Fed Chair in May this year. The news this week that Powell is now facing a criminal investigation over office renovations has further deepened fears about the Fed’s ability to fend off political pressures and firmed up expectations of a June rate cut once the new chair is in place. Both falling interest rates and diminished Fed credibility is positive for gold.
3. Softer US Dollar
The push and pull factors for holding less US dollars could intensify in early 2026, when the US Supreme Court gives its ruling on the legality of President Trump’s trade tariffs. If the tariffs are deemed illegal, there will be deep concern about a worsening of the US’s budget deficit, thereby adding to the USD’s vulnerability.
On the other hand, if the US tariffs proceed as planned, there will be strong incentive for countries to seek alternative trading partners and to diversify their currency holdings. The threat of currency devaluation could also persuade more Emerging Market countries to strategically increase their holdings of hard assets instead of US dollars. Whatever the drivers, the downward pressure on the US dollar and upward pressure on gold prices look set to continue.
Precious metals
The many factors detailed above led to gold prices surging by over 60 percent in 2025. Importantly, gold appears to have shifted from an asset class that investors only consider during times of crisis to one that has a permanent place in investor portfolios.
But alongside this phenomenon is also a broadening out of investor interest from gold to other precious and base metals. Silver for example has come to investor attention not just as a commodity with many industrial applications, but as another go-to hedge against geopolitical and economic uncertainty. It is notable that silver prices soared by over 150 percent in 2025, and yet has continued to show strong momentum even in the face of heightened geopolitical tensions. Since the start of the year, silver prices have already increased by 18 percent, compared to gold’s 6 percent rise. Platinum and palladium prices have also jumped more than gold YTD.
While this outperformance may be partially a “spillover effect” from the gold rally, silver and platinum are also supported by potential supply constraints. These stem from China’s export restrictions, US threats to place tariffs on imports, and current stockpiling by US manufacturers. With gold prices now sky-high, silver is also seen as a cheaper jewelry alternative and has seen a boom in demand from Indian consumers.
However, analysts warn that silver and platinum prices tend to be more volatile than gold. Without the same support from central banks, these other precious metals are less liquid and subject to supply and demand shifts, which in turn are dependent on macroeconomic factors and industrial trends.
Metals and miners
A different way to leverage the metals rally is to invest in mining stocks. At current prices, and even if they don’t rise any further, miners are enjoying margins that are up to five times higher than in 2024. As a result, the MSCI World Metals and Mining Index (USD) returned 65 percent in 2025, beating the MSCI World Index’s 21 percent based on strong earnings. Meanwhile the mining sector’s valuations remain attractive, with a forward PE ratio of 15.4 against 20 for the MSCI World. Furthermore, mining stocks unlike the metals provide dividend income. The dividend yield for the mining sector is around 1.9 percent currently, compared to 1.6 percent for the MSCI World.
However, it is the potential for mergers and acquisitions within the mining sector that has investors all excited. In September 2025, Anglo American announced a “merger of equals” with Teck Resources to create a leader in the global mining of critical minerals such as copper, iron ore and zinc. With base metals seeing high demand from within the tech, EV and AI supply chain, there is now a strong incentive for mining companies to consolidate their capabilities across a wide range of metals. So far this year, Rio Tinto and Glencore have announced that they are re-starting merger talks to create the world’s largest mining company valued at more than US$260 billion.
These moves look set to keep miners on investors’ radars, especially if metal prices continue to reach new highs.
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