On September 21, 2026, the Singapore Exchange (SGX) precious metals market achieved a historic breakthrough. Gold prices broke through the $4600/oz mark during trading, setting a record high since 1980, while silver prices also surged past $68/oz, reaching a new high since 2023. Meanwhile, SGX silver inventory data drew market attention—by the close of September 20, SGX silver inventory plummeted 18% from the previous week to 32,000 ounces, a near three-year low, causing physical delivery premiums to surge to $1.5 per ounce, far above the historical average. Behind this series of data are overlapping factors such as rising geopolitical risks, rising inflation expectations, and central banks' continuous gold purchases, which have opened a hedge allocation window for investors.
1. Gold Breaks Record High: Resonance of Hedge Demand and Central Bank Gold Purchases
The surge in gold prices first stems from the surge in global hedge demand. Since 2026, the Middle East situation has remained turbulent, and the Russia-Ukraine conflict has entered a critical stage. Geopolitical uncertainty has led investors to flock to gold as a traditional safe-haven asset. For example, on September 18, Iran announced the restart of its nuclear facilities, triggering international concerns about the Middle East situation, and gold prices rose 1.2% that day, hitting a new high for the day. In addition, major global central banks' continuous gold purchases have become a key force driving gold price increases. According to the latest data from the International Monetary Fund (IMF), in the first half of 2026, global central bank gold reserves increased by 450 tons, a 15% growth from the same period in 2025, with emerging market central banks contributing most of the increase. The People's Bank of China increased its gold holdings by 120 tons in the second quarter of 2026, the Reserve Bank of India by 80 tons, and the Central Bank of Russia by 60 tons, all reaching recent highs. These central banks' gold purchases not only increased physical demand for gold but also sent a signal to the market that "gold is a safe asset," further pushing up gold prices.
Secondly, the rise in inflation expectations is also a key factor in the rise of gold prices. Although the Federal Reserve raised interest rates multiple times in 2026, global inflation pressure has not eased significantly, especially with rising energy and food prices, keeping real interest rates low. According to U.S. Department of Labor data, the U.S. CPI in August 2026 increased by 3.7% year-on-year, higher than the market expectation of 3.5%, with energy prices up 5.2% year-on-year and food prices up 4.1% year-on-year. The real interest rate is about -1.2%, far below the historical average (about 0.5%), which provides solid support for gold. Market analysts point out that when real interest rates are negative, the opportunity cost of holding gold is low, so investors are more willing to hold gold to hedge against inflation risks.
Additionally, the weakening of the U.S. dollar index also helped boost gold prices. Since 2026, the U.S. dollar index has fallen from 105 to 98, a drop of about 6.7%, mainly due to the slowdown in U.S. economic growth and the approaching end of the Federal Reserve's interest rate hiking cycle. According to U.S. Department of Commerce data, U.S. GDP in the second quarter of 2026 grew by 1.8% year-on-year, lower than the market expectation of 2.2%, with consumer spending growth at 1.5% and investment spending growth at 0.8%, both below expectations. A weaker dollar makes gold priced in dollars more attractive to holders of other currencies. For example, the cost of buying gold for Eurozone investors decreased by about 6.7%, and for Japanese investors by about 5.5%, further driving up gold prices.
2. Silver Inventory Plummets: Game Between Industrial Demand and Investment Demand
Unlike gold, the rise in silver prices is more due to supply-demand imbalance. By the close of September 20, SGX silver inventory plummeted 18% from the previous week to 32,000 ounces, a near three-year low. Behind this data is the surge in silver industrial demand and the recovery of investment demand.
In terms of industrial demand, the rapid development of the photovoltaic (PV) industry is a key driver of silver demand. In 2026, global PV installed capacity is expected to reach 350GW, a 12% year-on-year increase, with China, India, and the U.S. being the main markets. According to data from the China Photovoltaic Industry Association, in the first half of 2026, China's PV installed capacity reached 120GW, a 15% year-on-year increase, with distributed PV installed capacity reaching 60GW, a 20% year-on-year increase. The production of PV cells requires a large amount of silver as a conductive material, with about 1.5 tons of silver needed per GW of PV cells, so the growth of the PV industry directly boosts silver's industrial demand. In addition, emerging industries such as 5G communications and electric vehicles also have demand for silver. For example, the construction of a 5G base station requires about 0.5 kg of silver as an antenna material, and an electric vehicle's battery requires about 0.1 kg of silver as a conductive agent. The growth of these industries has continuously increased silver's industrial demand.
In terms of investment demand, physical demand for silver is also increasing. As gold prices rise, some investors turn to silver to seek higher returns. For example, on September 20, 2026, the trading volume of SGX silver futures increased by 10% from the previous week to 150,000 lots, with retail investors accounting for 30% of the trading volume, a new high in nearly a year. In addition, the surge in physical delivery premiums for silver has also attracted the attention of arbitrage traders. For example, some investors buy SGX silver futures while selling physical silver to earn the spread from delivery premiums. According to SGX data, on September 20, 2026, the delivery premium for silver futures was $1.5 per ounce, while the price of physical silver was $66.5/ounce, creating an arbitrage space of about 2.2%, attracting a large amount of arbitrage capital inflow.
However, the decline in silver inventory has also raised market concerns. Analysts point out that the sharp drop in SGX silver inventory may lead to difficulties in physical delivery, thereby pushing up delivery premiums. If inventory continues to decline, silver prices may rise further, but it also increases market volatility. For example, in August 2026, SGX silver inventory plummeted 15%, triggering delivery premiums to surge to $1.2 per ounce, and silver prices rose 3.5% that day, hitting a new high for the day. Therefore, investors need to pay attention to changes in silver inventory to avoid risks.
3. Capital Flows: Main Capital Continuously Inflows into Precious Metals Market
According to SGX's position data, on September 20, 2026, the open interest of gold futures increased by 5% from the previous week to 250,000 lots, with long positions accounting for 65%, a new high in nearly a year. The open interest of silver futures also increased by 3% to 180,000 lots, with long positions accounting for 60%. This indicates that main capital is continuously flowing into the precious metals market, especially gold and silver.
In addition, ETF holdings are also increasing. The world's largest gold ETF—SPDR Gold Shares—reached 1250 tons on September 20, 2026, an increase of 20 tons from the previous week, a new high in nearly two years. Silver ETF holdings also increased by 15 tons to 850 tons. The increase in ETF holdings indicates that institutional investors are optimistic about precious metals, further supporting prices. For example, JPMorgan Chase issued a report on September 19, 2026, pointing out that the increase in gold and silver ETF holdings is a signal of optimistic market sentiment, and it is expected that gold prices will break through $4700/ounce and silver prices will break through $70/ounce.
In terms of capital flows, main capital is more inclined to gold because gold has stronger hedge attributes, while silver has stronger industrial attributes. For example, on September 20, 2026, the proportion of long positions in gold futures reached 65%, while the proportion of long positions in silver futures was 60%, indicating that main capital is more optimistic about the upward space of gold. In addition, the trading volume of gold is also higher than that of silver. On September 20, 2026, the trading volume of gold futures reached 300,000 lots, while the trading volume of silver futures reached 200,000 lots, further indicating that main capital is more inclined to gold.
4. Industry Analysis: Hedge Allocation Window is Open, but Risks Need to be Watched
For investors, the current gold and silver market landscape means that the hedge allocation window has opened. Analysts point out that the upward trend of gold and silver has not ended, especially gold, which may further break through $4700/ounce. However, investors also need to pay attention to risk factors, such as the Federal Reserve's monetary policy, the easing of geopolitical tensions, and the recovery of silver inventory.
First, the Federal Reserve's monetary policy is key. If the Federal Reserve continues to raise interest rates, real interest rates may rise, thereby suppressing gold prices. However, it seems that the space for the Federal Reserve to raise interest rates is not large. The market expects the Federal Reserve to stop raising interest rates in the fourth quarter of 2026, which supports gold. For example, Federal Reserve Chairman Powell said in his speech on September 18, 2026, that the Federal Reserve will adjust monetary policy based on economic data, and the need to raise interest rates has been reduced. This speech made the market expect the Federal Reserve to stop raising interest rates, and gold prices rose 0.8% that day.
Second, the easing of geopolitical tensions may reduce hedge demand. If the Middle East situation or the Russia-Ukraine conflict eases, gold's hedge demand may decline, thereby affecting prices. However, it seems that geopolitical uncertainty is still high, and hedge demand may continue. For example, on September 20, the UN Security Council held an emergency meeting to discuss the Middle East situation but did not reach a consensus, and geopolitical risks still exist, and gold prices rose 0.5% that day.
Finally, the recovery of silver inventory needs to be watched. If SGX silver inventory starts to increase, delivery premiums may fall, and silver prices may correct. But in the short term, silver's industrial demand is still strong, and the possibility of inventory recovery is low. For example, according to data from the China Photovoltaic Industry Association, in the second half of 2026, China's PV installed capacity will reach 150GW, a 10% year-on-year increase, with distributed PV installed capacity reaching 80GW, a 15% year-on-year increase, which will further boost silver's industrial demand and lead to continued inventory decline.
Overall, the SGX spot prices for gold and silver on September 21, 2026, show that the gold and silver markets are in a historic upward cycle. Geopolitical risks, inflation expectations, central bank gold purchases, and industrial demand have jointly driven the price increase. For investors, it is a good time to allocate gold and silver, but risk factors need to be watched, and risk control needs to be done well. For example, investors can adopt a diversified investment approach, allocating both gold and silver at the same time to reduce the risk of a single asset. In addition, investors can also pay attention to SGX's inventory data and capital flows to adjust investment strategies in a timely manner to obtain higher returns.
