Asia Stocks Climb to Six-Week High as Gold, Silver Surge to Records on Geopolitical Jitters and Dollar Weakness

Asia Stocks Surge as Precious Metals Rally

Asia stocks rose to a six-week high on Friday, with the MSCI Asia-Pacific Index climbing to its highest level since November 14 according to market analysis. Precious metals continued their bullish run, with silver hitting a record $73.4393 an ounce and gold nearing $4,525 per ounce. Investors are eyeing the year-end performance as markets remain on edge over U.S. Federal Reserve policy and geopolitical tensions.

The rally in precious metals has been fueled by strong demand and central bank purchases, with gold up over 71% and silver surging 158% according to reports. Japan's Topix and South Korea's benchmark index both saw gains, with South Korea's index achieving a 72% annual rise. The yen weakened but showed signs of stability after Japanese officials warned against excessive currency moves.

Geopolitical tensions and investor concerns over currency debasement continue to support the rally in precious metals. Analysts note that the strength of physical demand and persistent uncertainties could prolong the surge into 2026.

Why the Bull Run in Precious Metals

The surge in gold and silver prices has been driven by a combination of factors, including central bank demand, strong inflows into gold-backed ETFs, and investor concerns over rising global debt and currency debasement according to market data. Silver's rally has also been supported by industrial demand and a historic short squeeze in October. Analysts at MUFG highlight that major banks are forecasting further gains, with the strength of physical demand and geopolitical uncertainties pointing to a continued rally.

Gold prices have surged over 71% this year, on pace for their strongest annual gain since 1979, while silver is up 158% for the year according to market reports. The gold-silver ratio has dropped to around 64:1, indicating silver's relative strength. The rally in silver has been particularly dramatic, with the white metal surging over 4% to a record high on Friday.

Market Reactions and Policy Outlook

Investors are closely watching the U.S. Federal Reserve's policy outlook, with traders pricing in at least two rate cuts in 2026, though a move is not expected before June according to market analysis. The central bank itself has projected one more cut next year, but a divided Fed has left investors uncertain according to central bank reports. The U.S. dollar has been under pressure, pushing the euro, sterling, and the Swiss franc to recent highs according to currency reports.

Japan's yen has seen a slight recovery, with the dollar retreating from the 158 level zone that had drawn intervention in the past. The yen's performance has been influenced by verbal warnings from Japanese authorities, who have left intervention risks on the table as they balance monetary and fiscal policy according to market analysis. The Bank of Japan raised interest rates last week, but markets interpreted comments from Governor Kazuo Ueda as suggesting the central bank will not rush further rate hikes according to central bank statements.

Investor Outlook and Risks

As the year comes to a close, investors are focused on the potential for further gains in precious metals, with many anticipating a continuation of the rally into 2026 according to market forecasts. Analysts at MUFG and other institutions have noted that the strength of physical demand and persistent uncertainties are likely to keep the rally going according to institutional analysis. However, some analysts caution that the parabolic rise in silver prices could lead to significant corrections if demand destruction occurs.

The U.S. dollar index, which measures the dollar against six major currencies, was on course for a 0.8% drop for the week, its weakest weekly performance since July according to currency data. The dollar's decline has been influenced by expectations of further Fed easing and the yen's weak performance according to market analysis.

Investors are also watching for any signs of a reversal in Fed policy or a de-escalation in the Venezuela conflict, which could provide temporary relief for metal prices. The structural shifts in the precious metals market, including the silver supply deficit and the global move away from dollar dominance, are considered long-term trends that are unlikely to vanish.