Silver’s Explosive Rally Raises Profit-Taking Questions
After an extraordinary surge in silver prices, analysts are signaling that it may be time for investors to consider locking in gains. According to HSBC, silver’s year-over-year price increase of more than 200% has pushed the gold-to-silver ratio to multi-year lows—an unusual development that suggests the rally may be overstretched.
“After a year-on-year rise of more than 200% in the silver price, you may wonder if it’s time to sell the family silver,” HSBC analysts wrote in a note published Tuesday.
They explained that although gold has risen by roughly one-third over the same period, silver has significantly outperformed, reversing the gold-to-silver ratio from unusually high levels in April 2025 to unusually low levels today.
Momentum, Not a New Safe Haven
HSBC cautioned that silver’s rally does not necessarily signal a fundamental shift in its role within the financial system.
“It’s unlikely that silver has become a new safe-haven asset,” the analysts said. “What’s more likely is that, as it began to catch up with gold, momentum took over and retail investors joined in, just as industrial demand has been picking up.”
This combination of improving industrial demand and investor enthusiasm may have amplified price gains, increasing the risk of a pullback once momentum fades.
HSBC Maintains a Cautious Outlook on Precious Metals
HSBC has been issuing measured warnings on precious metals markets since the beginning of the year. In January, the bank suggested that rising geopolitical risks and expanding government debt could push gold prices as high as $5,050 per ounce in the first half of 2026.
However, the bank also warned that such gains could set the stage for a meaningful correction later in the year.
“We see a wide range of $5,050 to $3,950 per ounce for 2026, with an end-of-year price around $4,450,” the analysts said.
Despite raising its peak forecast, HSBC slightly lowered its average gold price estimate for 2026 from $4,600 to $4,587 per ounce, citing the potential for profit-taking and market corrections as prices rise.
Volatility Risks Ahead
HSBC noted that gold’s downside risks could intensify if geopolitical tensions ease or if the U.S. Federal Reserve pauses or reverses expected interest rate cuts. Under such conditions, a deeper correction could occur.
The bank also warned that gold prices are likely to experience heightened volatility throughout 2026, reflecting shifting expectations around monetary policy and global risk sentiment.
Looking further ahead, HSBC raised its average gold price forecasts for later years:
- 2027: $4,625 (up from $3,950)
- 2028: $4,700 (up from $3,630)
- 2029: $4,775 (new forecast)
Long-Term Confidence in Gold Remains Strong
Despite short-term risks, HSBC remains optimistic about gold’s longer-term prospects. In late November, HSBC currencies and commodities strategist Rodolphe Bohn said gold is likely to continue benefiting from strong demand by central banks and retail investors.
In the bank’s Think Future 2026 outlook, Bohn emphasized that gold continues to serve as an effective diversification tool, even amid recent volatility.
“We believe that investors can benefit from diversifying their exposure to global assets, particularly foreign exchange, through gold,” Bohn wrote. “It offers resilience during periods of significant turbulence and holds potential for further appreciation.”
Why Gold Still Has Support
Bohn highlighted that 2025 has been one of gold’s strongest years on record, driven largely by global uncertainty and concerns about U.S. dollar debasement.
“Despite improved global sentiment and rising global equities, current market conditions continue to provide a supportive backdrop for gold prices,” he said.
He added that ongoing central bank buying, continued interest in gold-backed ETFs, and expectations of a weaker U.S. dollar all support gold’s role as a portfolio stabilizer.
Key Risks to the Outlook
HSBC acknowledged that risks remain. A more hawkish stance from the Federal Reserve or a significant improvement in global economic conditions could weigh on gold prices.
Still, Bohn concluded that the broader environment remains favorable.
“Given the anticipated weakness in the U.S. dollar and further global easing—particularly from the Fed—there is a foundation for gold prices to rise, albeit at a slower pace than previously experienced.”
