Gold and silver soared to historical highs, as escalating geopolitical tensions and bets on further rate cuts in the US added momentum to their best annual performance in over four decades, UNN reports with reference to Bloomberg.
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The price of bullion rose by as much as 1.9%, surpassing the previous record of $4381 per ounce set in October, while silver rose by as much as 3.4%, approaching $70 per ounce. This move continues a rapid ascent that has firmly put both metals on track for their strongest annual performance since 1979.
The latest upward push comes as traders bet that the Federal Reserve will cut interest rates twice in 2026, as US President Donald Trump also advocates for looser monetary policy. Lower rates are typically a tailwind for precious metals, which do not yield interest.
Gold Rush: Precious Metal Price Reaches All-Time High - $438022.12.25, 04:28 • [views_27358]
Rising geopolitical tensions also increase the appeal of gold and silver as a safe haven. The US has tightened its oil blockade against Venezuela, increasing pressure on President Nicolas Maduro's government, while Ukraine for the first time attacked an oil tanker from Russia's shadow fleet in the Mediterranean Sea.
This year, the price of gold has risen by almost 70%, bolstered by increased central bank purchases and inflows into exchange-traded funds backed by bullion. Trump's aggressive moves to reorganize global trade, as well as his threats to the independence of the US central bank, added fuel to the fervent rally earlier this year.
Investors have also played a significant role in the rise of gold prices, partly driven by the so-called debasement trade – a move away from sovereign bonds and the currencies in which they are denominated, due to fears that their value will diminish over time due to rising debt levels. According to data compiled by Bloomberg, inflows into gold-backed ETFs have been growing for four consecutive weeks, and World Gold Council data shows that the total assets in these funds have increased every month this year, except for May.
"Today's rally is largely driven by early positioning for an anticipated Fed rate cut, amplified by low year-end liquidity," said Dilyn Wu, a strategist at Pepperstone Group Ltd. She added that slow job growth and lower-than-expected US inflation in November supported the narrative of further rate cuts.
Other precious metals also rose, with palladium up 5.1% to its highest level in nearly three years. Platinum rose for an eighth consecutive session and traded above $2,000 for the first time since 2008.