With strong demand and volatility risks coexisting, gold and silver have become core asset allocation targets for 2026.
2026-01-07 01:51:25
The investment attributes of gold and silver have been significantly elevated; they are no longer merely tools for hedging against inflation, but have become core assets in the global economic landscape. Gold's monetary attributes are increasingly prominent, making it a significant alternative to the US dollar; while silver, with its industrial properties, has become a key material for global economic transformation, upgrading, and electrification.
In his latest precious metals analysis report, Ole Hansen, head of commodities strategy at Saxo Bank, pointed out that the rebound in gold and silver prices at the beginning of the new year confirms the strong resilience of market demand.
In the final trading week of 2025, gold and silver prices plummeted due to sharp market volatility and the Chicago Mercantile Exchange's increase in margin requirements for speculative trading. However, the market subsequently recovered rapidly, with gold recovering almost all of its losses and silver rebounding by more than half of its decline.
In his report, Hansen stated, "The strong prices at the beginning of the year indicate that the core drivers supporting a surge in gold and silver prices in 2025 remain solid and show no signs of exhaustion. From a macro perspective, the main market logic remains unchanged: concerns about currency depreciation and the long-term sustainability of fiscal debt expansion remain unresolved, while market expectations of declining policy interest rates and a weaker dollar continue to support demand for hard assets. From this perspective, the year-end has not altered the overall investment narrative of the market."
Hansen stated that he is bullish on both gold and silver in 2026, but their underlying reasons for the upward trend differ. He also pointed out that a gold price exceeding $5,000 per ounce would be a reasonable target.
Hansen's analysis suggests that against the backdrop of a fragmented geopolitical landscape, high fiscal pressure, and a reshaping of the monetary union landscape, the long-term upward trend in gold remains unchanged. This week's arrest of Venezuelan President Nicolás Maduro by the US government is a prime example of gold's function as a hedge against geopolitical risks.
He stated, "The United States' tough stance in its 'backyard' could spur territorial expansion ambitions in other regions, particularly China and Russia, thereby exacerbating the fragmentation and volatility of the global landscape."
At the same time, Hansen believes silver has even greater upside potential, but this is not based on its monetary attributes as equivalent to gold. Despite the surge in speculative and investment demand for silver, its core position remains that of an important industrial metal.
He explained, "In short, it's difficult for a metal to simultaneously possess both monetary and industrial attributes. Central banks don't stockpile metals that are essential for industrial use. Silver accounts for a relatively small percentage of the total cost of finished products, and related companies simply cannot afford the risk of raw material shortages."
Regarding the gold-silver ratio, Hansen points out that historical data shows the market only considers silver to have a valuation premium relative to gold when the ratio falls below 30. Silver's current strong performance has pushed the gold-silver ratio down to 55, its lowest level since April 2013.
Short-term risks for gold and silver
While Hansen is optimistic about the medium- to long-term outlook for gold and silver, he also warned the market that it is necessary to be wary of the volatility risks brought about by fund portfolio rebalancing in the short term.
He cautioned that silver is projected to rise by as much as 150% in 2025, while gold is expected to gain by 67%, making them prime targets for fund portfolio rebalancing and potential reductions.
"Given a strong finish to 2025 and a continued upward trend at the beginning of 2026, index-tracking funds need to reduce their holdings in assets that have recently seen excessive gains and reallocate funds to underperforming or underweighted sectors. This type of fund flow is driven by technical factors and is unrelated to asset prices themselves, but it will still have a significant impact on market liquidity and price trends in the short term."
Hansen cited Goldman Sachs data, saying that the gold market may face $5.5 billion in selling pressure, while the silver market may see a sell-off of up to $5 billion.
He emphasized, "This also highlights the increased risk of short-term market volatility during the portfolio rebalancing window. However, even if a pullback occurs, the main reason will be technical capital flows rather than a weakening of fundamentals."
In his latest precious metals analysis report, Ole Hansen, head of commodities strategy at Saxo Bank, pointed out that the rebound in gold and silver prices at the beginning of the new year confirms the strong resilience of market demand.
In the final trading week of 2025, gold and silver prices plummeted due to sharp market volatility and the Chicago Mercantile Exchange's increase in margin requirements for speculative trading. However, the market subsequently recovered rapidly, with gold recovering almost all of its losses and silver rebounding by more than half of its decline.
In his report, Hansen stated, "The strong prices at the beginning of the year indicate that the core drivers supporting a surge in gold and silver prices in 2025 remain solid and show no signs of exhaustion. From a macro perspective, the main market logic remains unchanged: concerns about currency depreciation and the long-term sustainability of fiscal debt expansion remain unresolved, while market expectations of declining policy interest rates and a weaker dollar continue to support demand for hard assets. From this perspective, the year-end has not altered the overall investment narrative of the market."
Hansen stated that he is bullish on both gold and silver in 2026, but their underlying reasons for the upward trend differ. He also pointed out that a gold price exceeding $5,000 per ounce would be a reasonable target.
Hansen's analysis suggests that against the backdrop of a fragmented geopolitical landscape, high fiscal pressure, and a reshaping of the monetary union landscape, the long-term upward trend in gold remains unchanged. This week's arrest of Venezuelan President Nicolás Maduro by the US government is a prime example of gold's function as a hedge against geopolitical risks.
He stated, "The United States' tough stance in its 'backyard' could spur territorial expansion ambitions in other regions, particularly China and Russia, thereby exacerbating the fragmentation and volatility of the global landscape."
At the same time, Hansen believes silver has even greater upside potential, but this is not based on its monetary attributes as equivalent to gold. Despite the surge in speculative and investment demand for silver, its core position remains that of an important industrial metal.
He explained, "In short, it's difficult for a metal to simultaneously possess both monetary and industrial attributes. Central banks don't stockpile metals that are essential for industrial use. Silver accounts for a relatively small percentage of the total cost of finished products, and related companies simply cannot afford the risk of raw material shortages."
Regarding the gold-silver ratio, Hansen points out that historical data shows the market only considers silver to have a valuation premium relative to gold when the ratio falls below 30. Silver's current strong performance has pushed the gold-silver ratio down to 55, its lowest level since April 2013.
Short-term risks for gold and silver
While Hansen is optimistic about the medium- to long-term outlook for gold and silver, he also warned the market that it is necessary to be wary of the volatility risks brought about by fund portfolio rebalancing in the short term.
He cautioned that silver is projected to rise by as much as 150% in 2025, while gold is expected to gain by 67%, making them prime targets for fund portfolio rebalancing and potential reductions.
"Given a strong finish to 2025 and a continued upward trend at the beginning of 2026, index-tracking funds need to reduce their holdings in assets that have recently seen excessive gains and reallocate funds to underperforming or underweighted sectors. This type of fund flow is driven by technical factors and is unrelated to asset prices themselves, but it will still have a significant impact on market liquidity and price trends in the short term."
Hansen cited Goldman Sachs data, saying that the gold market may face $5.5 billion in selling pressure, while the silver market may see a sell-off of up to $5 billion.
He emphasized, "This also highlights the increased risk of short-term market volatility during the portfolio rebalancing window. However, even if a pullback occurs, the main reason will be technical capital flows rather than a weakening of fundamentals."
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