Despite a sharp selloff on Friday, gold and silver prices have risen quite a bit in the past few months, as have other commodities such as copper, but what is behind that?
Gold and silver have been in the spotlight the past few weeks as prices pumped to record highs. But on Friday, there was a sharp selloff for both precious metals, and to a lesser extent, for copper. Still, taking the long view, all of those metals have far outperformed the S&P 500.
After rising above $5,600 this week, gold futures dipped to $4,920 on Friday. Still, gold is up nearly 47% in the past six months and 73% over the past year. Silver has been even more astonishing. Silver futures collapsed more than 26% on Friday but are still up a whopping 122% over six months and more than 157% from a year ago. Copper is up more than 38% from a year ago.
There are different dynamics at play for the three metals, but there is some overlap, according to experts.
Gold
Gold is perhaps the most straightforward of the three metals.
Gold is seen as a safe-haven asset and typically does well in times of upheaval. People might invest in gold if they are concerned about geopolitical or economic risks. And for months, investors have been buying up the precious metal, pushing it to new highs.
Some of the global uncertainty in the financial markets this year has come from the sweeping tariffs and other trade escalations that have happened since President Donald Trump entered office.
“What gold is, of course, it’s a safe asset — and I think that demand for safe assets has just gone up in the last year for a whole bunch of reasons,” K. Geert Rouwenhorst, a professor of corporate finance at Yale University, told the Washington Examiner.
There are also major geopolitical factors at play, including Russia’s war in Ukraine, uncertainty about Venezuela, and possible unrest in the Middle East.
Notably, the dollar has posted declines. The dollar index dropped as low as 96.2 this week, down from recent highs of over 99 just last week, although it is back over 97. The Bloomberg Dollar Spot Index reached nearly 110 in January 2025. The relative value of the greenback has fallen 11.8% since that time in January of last year.
“Given concerns about the health of the macro picture for the global economy, given concerns about the strength and stability of the U.S. dollar, in these types of times, it’s a recurrent feature in the gold market that you have a crowding in when you have fairly high levels of geopolitical risk and trade policy uncertainty,” said Cullen Hendrix, senior fellow at the Peterson Institute for International Economics.
Joseph Cavatoni, a senior market strategist for the Americas for the World Gold Council, told the Washington Examiner that there will be a lot of uncertainty on the horizon for gold in the coming year.
For instance, there is a pending Supreme Court decision on Trump’s tariffs coming down the pipeline, Trump is meeting with Chinese President Xi Jinping in April, there is uncertainty about whether the United States will attack Iran, and the midterm elections will happen in November.
Silver
Silver is a bit more unique of a situation than gold. It has been stealing headlines all year, given its breakneck growth, but it is not completely used as a flight to safety or merely as an investment, as is the case with gold.
Rouwenhorst explained that silver has a sort of “dual feature” to it, where it also has practical and industrial uses that are driving demand.
“What’s happened simultaneously over the last year — there are sort of all the investments that have been taking place in AI and AI-related investments such as data centers and things like that — and much of that, the hardware of that is all related to industrial metals,” Rouwenhorst said.
In addition to AI and AI-related data centers, silver also has other industrial uses and is an input in things such as solar panels and electric vehicles.
But there is also an impact on consumers. Because silver prices have risen so much recently, those cost increases might be felt in those products that silver is an input in, for instance, the price of solar panels could end up increasing because the overall value of silver keeps rising.
“Silver, it’s a combination of hedge but then also an increasing demand for use in renewable technologies,” Hendrix said.
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Copper
Copper is different from the other two in that it is not a precious metal that is seen as a flight-to-safety investment.
Traditionally, copper has proven over centuries to be a procyclical commodity, which means that when its price goes up, so typically does the economy. But recently, there has been an influx in demand for the metal, which has put some upward pressure on prices.
Hendrix said copper is sitting at the nexus of a big spike in demand across three industries. Like copper, there is the AI and data center aspect, and there is a global renewable energy boom where copper is a big input.
And there is demand for copper for national security applications — not just in the U.S., but also across NATO and non-NATO members.
“To the extent that the world is becoming a more uncertain place, it is driving up demand for most of these commodities partially as a hedge, but in the case of copper, it’s actually driving up basic market demand for the underlying material,” Hendrix said.
Rouwenhorst also pointed out that the supply of copper is fairly inelastic, meaning that supply cannot quickly respond to price increases.
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“It’s not as if you can just open a copper mine from scratch,” he said. “it takes years to bring these mines online.”
For the same reason as silver, increased copper prices could put upward pressure on the prices of things that use it as an input, which is challenging for consumers and the economy in a time of already too-high inflation.
