Gold and silver prices have surged to unprecedented heights, driven by ongoing geopolitical tensions and speculation around potential interest rate cuts by the U.S. Federal Reserve. Gold has jumped more than 1.5%, breaking the previous record of $4,381 per ounce established in October, while silver has seen gains of up to 3.4%, nearing $70 an ounce. Both metals are on track for their strongest annual performance in over 40 years, marking a significant milestone since 1979.
The current climb in precious metals comes as traders anticipate that the Federal Reserve may implement two interest rate cuts in 2026. This speculation has gained traction as U.S. President Donald Trump has expressed support for looser monetary policy, which typically benefits gold and silver because they do not yield interest.
Additional geopolitical factors are amplifying the safe-haven allure of these metals. For instance, the U.S. has escalated an oil blockade against Venezuela, increasing pressure on its government, while Ukraine has made a notable attack on a Russian oil tanker in the Mediterranean. These developments have heightened market uncertainties, prompting investors to seek refuge in gold and silver.
Gold has seen a remarkable increase of nearly 70% this year, bolstered by heightened purchases by central banks and inflows into gold-backed exchange-traded funds (ETFs). The aggressive trade policies advocated by Trump and his threats to undermine the Federal Reserve’s independence have further fueled this bullish trend in the metals market. Notably, inflows into gold-backed ETFs have consistently risen over the last month, according to Bloomberg data, with the World Gold Council reporting increases in total holdings, save for one month this year.
Strategists suggest that the recent rally can be significantly attributed to speculative positioning surrounding anticipated Fed rate cuts, compounded by lower liquidity levels typically present at the year’s end. Factors such as sluggish job growth and milder-than-expected inflation in November have reinforced the outlook for further rate cuts.
In addition to gold and silver, other precious metals have also experienced noteworthy gains. Palladium has surged by over 4%, and platinum has exhibited a strong performance, trading above $2,000 per ounce for the first time since 2008, marking its eighth consecutive day of increase.
Overall, these developments reflect a dynamic shift in the precious metals market, driven by a combination of economic indicators and geopolitical events, fueling a compelling narrative of growth potential in the sector.