(Dec 22): Gold rose to an all-time high, with heightened geopolitical tensions and bets on more Federal Reserve rate cuts adding impetus to the best annual performance in more than four decades.
The precious metal climbed more than 1% to surpass the previous record of US$4,381 an ounce set in October. Traders are betting the Fed will cut interest rates twice in 2026 after a slew of economic data last week did little to provide more clarity on the outlook, though US President Donald Trump has advocated for aggressively lowering rates. Looser monetary policy is a tailwind for gold and silver, which don’t pay interest.
Geopolitical tensions that have risen in recent weeks have also enhanced the haven appeal of gold and silver. The US has intensified an oil blockade against Venezuela, stepping up pressure on the government of President Nicolás Maduro, while Ukraine attacked an oil tanker from Russia’s shadow fleet in the Mediterranean Sea for the first time.
The two precious metals are both heading for their strongest annual gains since 1979. Gold has surged about two-thirds, underpinned by increased central-bank purchases and inflows into bullion-backed exchange-traded funds. Gold-backed ETFs have seen inflows rise for five straight weeks, according to data compiled by Bloomberg, and World Gold Council figures show total holdings in these funds have risen every month this year except May.
Gold has bounced back quickly after a retreat from its peak in October, when the rally was seen as overheated. Goldman Sachs Group Inc is among several banks that predict prices will keep rising in 2026, issuing a base-case scenario of US$4,900 an ounce with risks to the upside. ETF investors, it said, are starting to compete with central banks for limited physical supply.
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“Central-bank buying, physical demand, and geopolitical hedging remain medium- to long-term anchors, while Fed policy and real rates continue to drive cyclical swings,” said Dilin Wu, a strategist at Pepperstone Group Ltd, in a note. “New entrants — such as stablecoin issuers like Tether and certain corporate treasury departments — are beginning to allocate to gold. This broader capital base adds resilience to demand.”
Silver advanced as much as 2.7% to a record US$68.9883 an ounce, buoyed by speculative inflows and lingering supply dislocations across major trading hubs following a historic short squeeze in October. The total trading volume for silver futures in Shanghai spiked earlier this month to levels near those seen during the crunch a couple of months ago.
Platinum advanced for an eighth straight session to trade above US$2,000 an ounce for the first time since 2008. The metal — which has rallied around 125% this year — has risen with added speed in recent days as the London market shows signs of tightening. Banks are parking more metal in the US to insure against the risk of tariffs, while exports to China have been robust as demand grows and contracts begin trading on the Guangzhou Futures Exchange.
See also: Silver hits record high on rate-cut bets and geopolitical strife
Spot gold rose 1.1% to US$4,386.32 an ounce as of 10.57am in Singapore. Silver advanced 2.6% to US$68.87. Platinum climbed 3.9% and palladium rose 4.5%. The Bloomberg Dollar Spot Index fell 0.1%.
Uploaded by Arion Yeow
