Gold continued its relentless rally on Thursday, hitting a new record high above $5,500 an ounce. According to LSEG data, spot gold prices rose more than 3% and last traded at $5,501.18 per ounce. February gold futures rose more than 3% to $5,568.66 an ounce. Spot silver prices rose more than 2% to $119.3 an ounce, while March U.S. silver futures prices rose nearly 5% to $118.73 an ounce. Silver surpassed $117 an ounce for the first time on Thursday after rallying more than 145% in 2025, according to LSEG data. The white metal is up about 65% so far this year. This profit has elevated the precious metal complex from platinum to palladium and even base metals. “We have been predicting a collapse in gold prices since early last year,” said Ed Yardeni, president of Yardeni Research. But, he added, “prices for all precious metals, many base metals and rare earth minerals have collapsed.” Given the unprecedented volatility, I would label this precious market a bust. MKS PAMP analyst Nicky Shields says this is due to demand from investors seeking protection from a combination of geopolitical tensions, ballooning government debt and uncertainty over the outlook for interest rates and currencies. Sustained central bank buying is supporting gold, and expectations of eventual monetary easing also make non-yielding assets more attractive compared to safe-haven U.S. Treasuries. Silver’s Rise Fueled by its role as an industrial metal, silver has further accelerated its movement, adding upward momentum to an already supply-constrained market with demand related to trends in solar power, electronics, and electrification. “Given the unprecedented volatility, we would conclude that a valuable market is doomed,” Nikki Shields of MKS PAMP told CNBC. Analysts said prices were driven more by volatile liquidity flows than by physical supply and demand, leading to extreme volatility and repeated deviations from fundamentals. @SI.1 1M Mountain Silver’s rapid advance was followed by an even sharper pullback this month “Precious metals have melted over the past two months and are tactically overbought,” she added. Maximilian Tomei, chief executive officer and co-portfolio manager at Garena Asset Management, also said that recent price movements have little to do with fundamentals. XAU= “This is important because gold is like a currency. If the pricing denominator is weak, the price of gold will rise.”The dollar index, which measures the strength of the U.S. currency against a basket of currencies, has fallen nearly 11% over the past 12 months. However, Tomei cautioned that while some fundamental demand for precious metals has been driving the recent rally, that alone does not justify the size of the rally. “Fundamentals alone cannot explain a 200% rise in a commodity,” he said. “The trend in silver is overstated and it’s a series of discontinuities. The market is collapsing,” he said. Tomei added that another potential driver for precious metals is excess liquidity flowing through global markets. As asset prices rise, investors can borrow more against their portfolios through margin loans and other less visible forms of leverage, effectively creating new money in the system. When a stock’s valuation increases, some of that liquidity looks elsewhere, he explained. In Tomei’s view, metals such as gold and silver are increasingly serving as parking lots for that capital, not because fundamentals have changed dramatically, but because liquidity needs a home. Some analysts said government bonds were losing some of their traditional appeal as safe-haven assets as debt burdens swelled, as seen in the recent global bond sell-off. Are you disconnected from reality? As a result, price movements are exaggerated, especially in smaller precious metals markets, where relatively modest capital inflows can cause prices to rise sharply, making rallies feel disconnected from traditional supply and demand dynamics. Similarly, Guy Wolff, global head of market analysis at global financial services platform Marex, suggested that price trends for some of the precious metals complexes are becoming increasingly distorted. Markets such as silver and platinum are only a fraction of the size of major equity benchmarks such as gold and the S&P 500, meaning that the recent influx of speculative capital has had a significant impact on prices. Capacity constraints mean the metal’s physical supply cannot increase quickly enough to match surging demand, he said, resulting in prices “completely diverging from strong physical demand,” and that momentum could reverse just as quickly if speculative investors start taking profits and liquidity declines. But not everyone agrees that price discovery (the process of establishing a market price where supply and demand for a good match) has completely broken down. Gautam Varma, managing director at strategic advisory firm V2 Ventures, declined to say that the precious metals market is doomed, but said the surge reflects the growing influence of speculative capital. “What we see is that there is a lot more speculative capital at play, and that speculative capital may exist for reasons other than basic supply and demand.”