Gold and silver may be overbought in 2026, but still underowned
It’s that time of year once again, as Kitco News launches its annual Outlook series. The news team is putting together comprehensive features and interviews that will help investors prepare for the new year.
Of course, the biggest question on everyone’s mind is whether gold and silver’s momentum can last. The precious metals are looking to end the year on an unprecedented bullish run.
So far this year, gold has hit nearly 50 all-time highs as it trades around $4,300 ahead of the weekend. The yellow metal is up more than 65% so far this year and is seeing its best annual gains since 1979.
Of course, gold’s gains pale in comparison to silver. Although the grey metal is off its highs above $64.66 an ounce, it is up more than 6% this week and trading at record highs: silver prices are up 115%!
Given the gains the precious metals have made this year, it’s not surprising that some analysts are trying to talk down the momentum. The Bank for International Settlements attracted a lot of attention this week after publishing a report stating that both gold and equities are in bubble territory.
That may be true, but according to one analyst, even if the gold market is a bubble, it doesn’t mean it will pop next year. A new theme growing in the precious metals sector is that both gold and silver may be overpriced but underowned.
It’s hard to see the scenario that would pop the precious metals bubble. Are interest rates going to go higher next year? Will globalization trends reemerge? Will government spending be reined in?
These are all questions we have been asking analysts as we build our coverage over the holidays. So far, the answer to these questions has been a unanimous “unlikely.”
Many analysts expect the Federal Reserve to continue cutting interest rates even as inflation remains sticky, which means real yields will continue to fall, reducing gold’s opportunity cost as a non-yielding asset.
At the same time, economic and geopolitical uncertainty is expected to keep a lid on GDP growth next year. Although the new AI economy is projected to keep stock markets well supported through 2026, growing risks in equities mean gold remains an attractive diversification tool.
While gold has seen unprecedented demand this year, it still represents only a small portion of global financial assets, and there is still plenty of room for investors to diversify into the market.
So what does all this mean for the precious metals? While there is no clear consensus yet, many analysts continue to see a $5,000 gold price as an achievable target next year. At the same time, silver prices could hit $75 to $80 an ounce, with some even calling for $100.
