By: Ecnomy Middle east

Gold prices and the broader precious metals market began 2026 on a strong footing, extending their rally after record gains in 2025, as geopolitical tensions and expectations of lower interest rates this year continued to underpin safe-haven demand.

In the UAE, gold rates marked notable gains on Friday, with 24-carat gold rising AED6.5 to AED526.75 and 22-carat gold gaining AED6 to AED487.75. Additionally, 21-carat gold inched up AED5.75 to reach AED467.75, while 18-carat gold edged up AED5 to AED401.

Meanwhile, 14-carat gold gained AED4 to AED312.75.

Globally, spot gold rose 1.24 percent to $4,379.09 as of 5:35 GMT. Meanwhile, U.S. gold futures for February delivery rose 1.15 percent to $4,390.90.

Fed rate cut expectations continue to support bullion

Gold prices delivered an exceptional performance in 2025, closing the year with a 64 percent gain, their biggest annual rise since 1979. This rally was driven by interest rate cuts, expectations of further easing by the U.S. Federal Reserve, geopolitical tensions, strong central bank demand and growing holdings in exchange-traded funds.

Last week, Americans submitted the lowest number of new jobless claims in a month. While claims have eased from recent peaks, the labor market appears to remain weak under President Donald Trump’s second term. Analysts noted that these figures had little impact on expectations for multiple rate cuts this year. Investors currently expect at least two rate cuts by the Fed this year.

Gold prices also rose as geopolitical tensions escalated as Russia and Ukraine exchanged accusations of targeting civilians on New Year’s Day, even as talks led by U.S. President Donald Trump sought to end the nearly four-year conflict.

At its December policy meeting, the U.S. Federal Reserve cut interest rates by 25 basis points, setting the federal funds rate target range at 3.50-3.75 percent. Supporters cited rising downside risks to employment and easing inflationary pressures.

“Gold enters 2026 carrying the momentum of a historic multi-year rally—yet what’s interesting is how uncrowded the market still feels. Even after breaking records through 2024 and 2025, gold is often described as ‘overbought’ but almost never ‘over-owned.’ And that difference matters. Institutional positioning still has room to expand, suggesting this rally isn’t running on excessive speculation. It’s running on structural demand that hasn’t peaked yet,” said Farah Mourad, market analyst, IG.

Silver ended the year up 147 percent

Spot silver gained 3.45 percent to $73.93 per ounce, after reaching a record high of $83.62 on Monday. Silver ended the year up 147 percent, outperforming gold and marking its strongest annual performance on record.

The metal surpassed multiple key milestones for the first time, driven by its classification as a critical U.S. mineral, supply constraints and low inventories amid rising industrial and investment demand.

“Silver hasn’t just outperformed gold—it has rewritten the narrative after almost a decade of lagging,” said Mourad.

“And honestly, the shift didn’t come out of nowhere. 2025 was the year the market changed character. If you look at the cumulative performance, silver suddenly stopped behaving like 2022-2024’s choppy, frustrating range and started showing trend strength, higher lows and a steady build in momentum,” she added.

As for forecasts, she added, the average of major banks places silver in the $56-$65 range for 2026. That’s the conservative view. Technical models stretch further—towards $72 and $88, and potentially higher if the gold/silver ratio really compresses.

As gold prices rose, spot platinum rose 2.45 percent to $2,104.27 per ounce, following a record high of $2,478.50 on Monday, also posting its largest yearly gain ever at 127 percent. Palladium increased 2.17 percent to $1,639.95 per ounce, finishing the year up 76 percent, its best performance in 15 years.