Gold is set to continue outperforming silver, driven by strong central bank demand and a slowing solar sector in China, Goldman Sachs said in a note Monday.
The bank pointed to the widening gold-silver ratio 鈥� now around 102, up from 84.7 a year ago 鈥� as a sign that silver is unlikely to catch up with gold鈥檚 rally anytime soon. The ratio measures how many ounces of silver are needed to buy one ounce of gold.
鈥淲ith Chinese solar production slowing, elevated recession risks, and continued gold buying by central banks into 2025, we expect gold to keep outshining silver,鈥� Goldman said.
Silver is essential for solar panels because of its conductivity, helping carry the electricity generated when sunlight hits the panel. Each solar panel can contain as much as 20 grams of silver.
Still, according to Goldman, silver prices could benefit from stronger gold demand next year due to the metals鈥� close trading relationship.
Gold has jumped more than 26% so far in 2025, recently hitting a record high of $3,500 an ounce. Silver has gained 12% this year and is trading at about $32.40 an ounce.
Goldman reiterated its bullish outlook on gold, forecasting prices to hit $3,700 by the end of the year and $4,000 by mid-2026. In a recession scenario, the bank sees gold potentially reaching $3,880 by year-end, driven by a surge in ETF inflows.
Gold up ahead of Fed decision
On Monday, gold prices rose more than 2% as investors turned to the metal amid economic uncertainty and ahead of this week鈥檚 US Federal Reserve meeting.
Spot gold climbed 2.3% to $3,316.18 an ounce by 10:20 a.m. ET, recovering from back-to-back weekly losses. US gold futures also rose 2.6% to $3,328.80 an ounce in New York.
Traders are watching for comments from Fed Chair Jerome Powell on Wednesday, with the central bank widely expected to keep rates unchanged in the 4.25%-4.50% range.
Goldman noted that if concerns rise over Fed independence or shifts in US reserve policy, gold could climb to $4,500 by the end of 2025.
US President Donald Trump said Sunday he doesn鈥檛 intend to remove Powell, whose term ends in early 2026. Trump also commented on trade with China, saying he鈥檚 open to lowering tariffs but has no plans to speak with Chinese leadership this week.
(With files from Reuters)