When you get that situation, gold and silver become a lot more attractive as a hedge against a falling dollar and inflation worries, which is a pretty classic pattern.
Central banks keep buying gold, increasing their reserve holdings as part of a broader strategy to diversify their portfolios, sucking up supply and adding structural weight to the market.
Silver: The Dual Role Player
Silver’s story is different from gold’s, as it’s not driven solely by investment demand. Industrial consumption, especially from the solar, electronics, and EV sectors, accounts for a large share of silver demand, creating a structural shortage that might persist through 2026. That dual role adds some extra volatility to the picture, both up and down.
Looking Ahead
Looking ahead, traders are closely watching upcoming US economic releases. The US ISM Services Purchasing Managers Index (PMI) is scheduled for release on Wednesday.
According to the economic calendar, the ISM Services PMI for December is forecasted to come in at 52.2, slightly lower than the 52.6 reading recorded in November, which showed continued expansion in the services sector. Moreover, attention will shift to the US December employment report due on Friday.
The economy is expected to add around 55,000 jobs, whereas the Unemployment Rate is projected to edge down to 4.5%. If the data comes in stronger than expected, this could support the US Dollar. Consequently, a firmer Dollar may put pressure on USD-denominated Gold prices in the near term.