Why the scorching-hot rally in metal markets could soon stumble
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- Analysts think the rally in gold, silver, and copper could soon sputter.
- Precious and industrial metals were up big in 2025, with silver up 150%.
- But some metals are showing signs of being overbought, and investor excitement is expected to fade.
The searing run-up in precious metals might be capped this year.
After a wild rally in precious and industrial metals in 2025, forecasters think investors' voracious appetite for gold, silver, and copper is about to wane, resulting in a tumble from current levels around all-time highs.
Capital Economics researchers said in a note this week that they believe the "FOMO-driven demand" for precious metals would likely dissipate in 2026 and potentially give way to "just-as-rapid price falls."
In a separate note, the firm said it expects copper, which is currently trading around $13,200 a ton, to ease to around $10,500 a ton by the end of the year, implying a 20% decrease.
In October, the firm also said it sees gold ending 2026 around $3,500 an ounce, implying a 21% decrease from the precious metal's current levels.
David Oxley, a chief climate and commodities economist at Capital Economics, pointed to the rapid increase in metals in the final months of 2025, and suggested "retail investor-driven exuberance" could be driving some of the moves.
Many of the metals that rallied, like silver and copper, rose partly due to an imbalance of supply and demand, Oxley said. Both metals are in short supply at a time when demand from data centers and other AI infrastructure is rising.
But high prices incentivize more people to recycle their metals or add to the overarching supply, he said. Meanwhile, the demand for some metals, like silver, looks like it has become "less sensitive" to price changes lately, one possible sign that prices could soon start to normalize.
"Looking ahead, the old adage that 'high prices are the cure for high prices' will come into play to some extent over time," Oxley wrote.
"Against this backdrop, and in contrast to increasingly bullish analyst forecasts, we are comfortable with our view that gold and precious metals in general will end this year lower than their current level," he added.
Some metals are already flashing technical signals that they're overbought. Gold, for instance, appears to be the most overbought it has ever been, according to a Société Générale analysis of the metal's Relative Strength Index.
Datastream/Société Générale
Silver also appears to have begun "overheat," Wells Fargo Investment Institute wrote in December, citing the metal's RSI reading.
Some of the strength in precious metals lately appears to be attributable to "speculative buying," Joe Mazzola, Charles Schwab's head of trading and derivatives strategy, wrote in a note.
Meanwhile, Michael Hsueh, an analyst at Deutsche Bank, said he saw downside for gold and silver as the Bloomberg Commodity Index undergoes its annual rebalancing in January. The index will likely trim its weightings in gold and silver to comply with certain guidelines, he said.
A decline in these metals of the magnitude some forecasters are predicting would mark the reversal of what's been a historic rally.
Gold, a safe-haven and inflation hedge that garnered more attention from investors in 2025 amid economic concerns, finished the year up 64%, marking its best year since 1979.
Silver soared 150% in 2025, also marking its best year since '79.
In New York, copper climbed over 40%, marking its best year since the Great Financial Crisis.