Gold and silver: Where do we think prices go next?

Gold's blistering 247% run from $1,615 in November 2022 to $5,608 in January 2026 has stalled, consolidating around $4,230 for the past three months as central bank hawkishness, higher real rates, high-price demand destruction and institutional profit-taking bite. Two things decide what's next: Wednesday's Fed decision and market sentiment. Higher US interest rates hit gold demand and push spot prices down. But if today's AI and semiconductor sell-off, fuelled by safety warnings and macro headwinds, deepens, expect a two-phase reaction: a short, liquidity-driven dip, then a rally as safe-haven money pours in. Long-term, gold still earns its place as a hedge against currency debasement and a portfolio diversifier. Physical gold gives you control and zero counterparty risk, but you pay for storage and dealer premiums. Virtual gold is cheap to trade and highly liquid and better suited to active management.

Gold has stopped behaving like a rocket and started behaving like a very expensive insurance policy. After such a dramatic run from around $2,000 to more than $5,300 an ounce, some pause was inevitable. Investors have already priced in a lot of fear: geopolitical risk, debt worries, stubborn inflation and uncertainty from Washington. That does not mean the case for gold has vanished, but the easy gains may already have been made. Over the next few weeks it could remain choppy, with politics and rate expectations doing most of the pushing. Over the next few months, I would expect gold to hold its appeal rather than surge unless there is a fresh shock. As a long-term hold, it still has a role as portfolio ballast, not a magic money machine. Physical gold offers control but brings storage and insurance issues; virtual gold is easier, but investors must understand exactly what they own.

People buy gold as a safe-haven asset. When fear rises, so does demand — and the price follows. We are at a tipping point as to will world events get better or worse.

But you have to understand who is buying. Some want protection against currency and inflation risk. Others pile in simply because the price is going up. Always remember why something started rising. If those reasons start disappearing, the price comes down — and the bandwagon investors bail out to take their profits.

Worth holding long term? Yes, as part of a well-diversified plan — not as a get-rich-quick asset. You get poor even quicker.

Gold is a hedge against fear and inflation, not a substitute for a well-diversified plan.

Momentum can't last forever. The 2023-26 surge was built on falling real yields, relentless central bank buying and a weakening dollar. Now an oil shock from the Iran conflict has kept inflation sticky and pushed the Fed towards hikes rather than cuts. Higher real yields and a firmer dollar are gold's oldest enemies, and after a near doubling, some profit taking was overdue.

Near term, expect volatility rather than a resumed straight line rise. This week's Fed decision is the catalyst, and $4,000 looks like the level buyers will defend. Longer term, the case is intact: sovereign debt, de-dollarisation and geopolitical risk haven't gone anywhere. Gold is insurance, not an investment I'd expect to compound wealth, which is why a 5% allocation earns its place while a core position doesn't.

Physical or paper? For most investors a low cost, physically backed (tracker) ETC wins on cost & liquidity. Bars and coins only make sense if the point is owning something no counterparty can freeze.

The headlines say gold is in a bear market. It has dropped around 20% from its high of about $5,589 to roughly $4,000, and silver has roughly halved from $120 to $60. But that misses the bigger picture. A year ago, $2,000 gold was seen as a ceiling. It then went through $3,000, $4,000 and $5,000 in quick succession. Silver, which people wondered for years would ever see $50 again, reached $120. That is the real story. A pullback after a run like that is normal, and silver always moves more sharply than gold in both directions. What drove the rise was not speculation but central banks. Since Russian reserves were frozen in 2022, they have been buying gold and pulling it home. ECB have been taking metal out of the New York Fed, and China is thought to hold far more than it reports. Gold is behaving as money again, responding to government debt, rising bond yields and a loss of trust between nations. Anyone who bought above $5,000 will feel bruised, but the longer trend has not changed