Gold and silver hit new historic highs amid rising geopolitical tensions
The price of gold surpassed $4,400 per ounce for the first time in history, while the price of silver approached the $70 level, during Asian trading on Monday.
The record high is due to a combination of rising geopolitical tensions, expectations of a US interest rate cut, and strong demand from central banks and investors.
The two precious metals are poised to end a historic year with the strongest annual gains in more than four decades, amid expectations that the bullish momentum will continue into next year.
Record prices on the back of accelerating events
Precious metals markets witnessed a historic movement, as the price of gold rose today to new highs near $ 4420 per ounce, and the price of silver rose today by more than 3% to $ 69.44, and silver is now trading below $ 69 per ounce.
The jump came amid rising geopolitical tensions, including the US tightening its oil embargo on Venezuela and military operations in Syria, which boosted demand for precious metals as a traditional safe haven.
In addition, other precious metals also performed strongly, with platinum climbing 4.3% to $2057, its highest level in more than 17 years, while palladium rose 4.2% to $1786.
Key drivers of the historic rally
The record rally in gold and silver is being driven by a combination of interlocking factors:
- Monetary policy and interest rate cut expectations: Markets are betting heavily that the U.S. Federal Reserve will cut interest rates twice over the next year 2026. Since gold and silver are non-yielding assets, their attractiveness increases in a low-interest environment, as the opportunity cost of holding them falls.
- Weak US dollar: A weaker dollar index has supported gold prices, as it makes the precious metal less expensive for buyers using other currencies.
- Strong institutional demand: Central banks around the world continue to aggressively buy gold as part of their reserve diversification strategy. Gold-backed exchange traded funds (ETFs) have recorded positive fund flows for five consecutive weeks, indicating widespread interest from institutional and retail investors.
Exceptional annual performance and outlook
Gold and silver are on track to end 2025 with the strongest annual performance since 1979. Gold has gained nearly 67% since the beginning of the year, breaking the $3,000 and $4,000 per ounce levels for the first time in its history.
Silver has been an even brighter performer, jumping more than 140% since the beginning of the year, supported by strong investment flows and supply-side constraints.
Experts' predictions and analysis
Goldman Sachs: The group expects gold prices to continue to rise, and has a base scenario of $4,900/oz by December 2026, with upside risks.
Matt Simpson (Stone X): Notes that seasonal factors typically favor gold and silver during December, but warns that lower trading volumes towards the end of the year could increase the potential for short-term profit-taking.
Most forecasts indicate that the overall trend for gold remains bullish in the medium and long term, and that any upcoming drop is an opportunity to buy rather than panic.
He recommends long-term investors to be patient, noting that gold is likely to exceed $5,000 per ounce as long as current conditions persist.
Investment tips for market volatility
With record highs and volatility, experts offer some guidance for investors:
- For the long-term investor: If the goal is to hedge against inflation or store value, the most appropriate strategy is to buy and hold for the medium to long term.
- For the short-term trader: Be cautious and buy in stages to avoid the risk of mistiming, as each strong rally may be followed by a correction.
In the end, the combination of accommodative monetary policy, a tense geopolitical situation and strong institutional demand is pushing gold and silver to new heights, confirming their status as a safe haven and strategic asset in a global investment portfolio.
