Gold and silver’s historic rally could resume as ‘fog of war’

The rally that propelled gold and silver to record highs in 2025 could resume if a US-Iran peace deal is reached, market watchers told CNBC as prices rose on Thursday.

Spot the gold it jumped 1.2% to $4,750 an ounce early Thursday, amid hopes that the US and Iran may be nearing a deal to end the 69-day war.

Gold and silver both enjoyed record rallies in 2025, rising 66% and 135%, respectively, during the year. However, they saw a more volatile trade in 2026, with silver futures facing their biggest one-day slump since the 1980s at the end of January and gold down more than 10% from its January peak.

Since the outbreak of the US-Iran war on February 28, gold’s reputation as a “safe haven” in times of turmoil has come under pressure as some of the drivers behind its rise have been questioned.

The power of higher interest rates, a stronger US dollar due to rising oil prices, and traders exiting positions have all contributed to its recent decline, especially as the yellow metal enters a “very tight” conflict, according to Ross Norman, CEO of precious metals website Metals Daily.

This gave traders a reason to take profits and for the market to rally as traders sold their best-performing assets, he told CNBC.

Francis Tan, chief Asia strategist at Indosuez Wealth Management, described the area as “very helpful” during the March market turmoil in an interview with CNBC on Tuesday.

“If you look at March, when prices are sold, for an investor who has some share of gold during that period, you are sitting on a strong return of gold, and you can probably take it off the table to cover some of your equity losses.

“So gold as a safe haven has played its role.”

During the conflict, gold traded against both oil prices and the US dollar.

“The dollar and gold both converged, seeing hot money flowing as energy choked, while the dollar benefited from safe flows,” Norman added. “The peace agreement can suggest that these spirits are free and we are seeing that right now. It is as if the handbrake has been released on gold and silver.”

Philippe Gijsels, chief strategist at BNP Paribas Fortis, has been bullish on gold and silver for a long time, and his belief that there is more to come for the metals has not wavered as volatility continues to grip precious metal markets.

He told CNBC on Thursday that he saw the drop in gold and silver prices as a “consolidation phase.”

“This time around, precious metals showed a strong correlation with equities. Both were hit hard by fears that inflation would push up interest rates,” Gijsels said. “In our world interest rates are like gravity. When interest rates go up, gravity goes up and all assets are lowered, including precious metals.”

As the war in Iran continues – prompting warnings of price shocks and faltering economic growth – markets rushed to price in the suspension of monetary tightening cycles in various major economies, as some central banks are now expected to raise interest rates to avoid the impact of energy prices.

But hope resurfaced on Wednesday following reports that the US and Iran were close to a peace deal. Gijsels noted that precious metals were now recovering in proportion.

“We expect the bull market for gold and silver to resume and the metals to reach record highs in the not-too-distant future, possibly this year,” he told CNBC.

Gijsels said on Thursday that all the gold and silver supplies so far “are still very active.”

“Central banks and governments will continue to move away from US government paper and into gold,” he told CNBC. “As we live in a structurally high inflation environment one needs to have real assets. Precious metals are obviously part of this. [And] as the fog of war lifts, investors will return to the market for gold and silver.”

He said the drop in gold and silver prices in recent months “wasn’t the end, it was just the end of what will end up being the longest bull market in gold and silver in history.”

Paul Williams, managing director of gold and silver Solomon Global, told CNBC in an email Thursday that it was difficult to predict the ongoing battle, especially for volatile silver. But, like Gijsels, he said silver prices are still supported by the same drivers fueling the 2025 meeting.

“The supply of virtual silver remains strong, while strong demand for green technology continues,” he said. “The US-Iran standoff has only underscored the strategic case for solar energy. AI-related demand remains significant and growing, adding further pressure to a stretched supply/demand balance.”

Silver is used for many industrial purposes, and is an important component in goods from computers and cell phones to solar panels and cars. While Williams said short-term volatility is likely to continue until a firm deal between the US and Iran is formalized, he said rates should be supported in the long term.

“I expect we will see better and better conditions as more and more people want security and assurance that they will be able to manage assets outside of the traditional financial system,” he said.

“If a peace deal is signed, silver will likely benefit from economic development, strong industrial demand, and a greater appetite for risk on the part of investors. If negotiations fail, gold will likely lead the first move to safety, but the strength of the physical silver market means it could come very quickly.”