The explosive rally is coming, gold and silver jointly hit a new all-time high, and risk aversion sentiment is heating up across the board.

On Friday during Asian trading hours, a explosive rally occurred—spot gold surged nearly $52, reaching a historic high of $4531.34 per ounce; silver soared over 4%, breaking the $75 per ounce mark for the first time. What signals are hidden behind this explosive upward momentum?

Safe-Haven Assets Attract Capital, Geopolitical Tensions Become Key

Bloomberg analysis pointed out that escalating global geopolitical tensions are continuously driving funds into precious metals markets. Recently, tensions in Venezuela have intensified—U.S. sanctions on oil tankers and increased pressure on the Maduro government—further boosting the appeal of gold and silver as safe-haven assets. Meanwhile, signals of instability have also emerged in Africa, with the U.S. conducting military strikes against terrorist targets in Nigeria, further strengthening market demand for safe-haven instruments.

Against this backdrop, many traders are turning to precious metals as hedging tools, which also explains why this round of rally is so explosive.

Weakening Dollar Fuels the Rally, Monetary Policy Benefits Precious Metals

This week, the dollar performed weakly, with the Bloomberg U.S. Dollar Spot Index falling 0.8%, marking the largest weekly decline since June. It is well known that a weaker dollar usually supports rising gold and silver prices because precious metals priced in dollars become cheaper, attracting buyers worldwide.

On the other hand, the Federal Reserve’s easing policies are also playing a role. The Fed has cut interest rates three consecutive times, and lower borrowing costs are favorable for non-yielding assets like gold. Traders are also betting that rates will be further cut in 2026, providing a reason for long-term bullishness on precious metals.

Capital Flows Explode, ETF Buying Becomes a Major Driver

Massive capital inflows into exchange-traded funds (ETF) have become a key driver of this explosive rally. According to the World Gold Council, excluding May, total gold ETF holdings have increased every month this year. Among them, the largest precious metals ETF—the SPDR Gold Trust—has grown its holdings by over 20% this year, indicating strong demand from institutional investors for gold.

Silver’s Rally More Remarkable, Supply Mismatch Supports Prices

Silver’s performance is even more impressive, rising for the fifth consecutive trading day. This is driven by both speculative capital inflows and supply-side factors. Since the October “short squeeze” event, significant inflows have appeared in London vaults, but most of the globally available silver remains in New York, as traders await the U.S. Department of Commerce’s investigation into whether “critical mineral imports threaten national security.” This investigation could lead to tariffs or trade restrictions on silver, further exacerbating supply uncertainties.

Year-to-Date Performance Reaches Near 50-Year Highs

Looking at the full year, gold has risen approximately 70%, and silver has gained over 150%, with both on track to deliver their best annual performance since 1979. This hot rally is driven by multiple factors resonating together: continuous high-level holdings by central banks, ongoing capital inflows into ETFs, a shift in Fed policy towards easing, and persistent geopolitical turmoil. The appeal of precious metals as ultimate safe-haven assets has reached a recent high.

How long will this explosive rally last? The market’s answer is clear— as long as uncertainties persist, the safe-haven premium of precious metals will not disappear.