Gold and Silver Set New Record Levels Supported by Rate Cut Expectations

SadaNews - Gold has reached a new record level, driven by escalating geopolitical tensions and bets on additional rate cuts by the Federal Reserve, contributing to the best annual performance of the precious metal in over four decades.

The precious metal increased by more than 1% to surpass the previous record of $4,381 per ounce set in October.

Traders are betting that the Federal Reserve will cut interest rates twice in 2026, after a series of economic data released last week did not provide further clarity regarding the future interest rate outlook, despite US President Donald Trump's call for a sharp reduction. A looser monetary policy is a supportive factor for gold and silver as they do not yield any returns.

Moreover, geopolitical tensions have enhanced the appeal of precious metals as safe havens. The United States has intensified an oil blockade on Venezuela, increasing pressure on President Nicolás Maduro's government, while Ukraine launched an attack on an oil tanker belonging to the "shadow fleet" of Russia in the Mediterranean for the first time.

A Historic Year for Precious Metals

Precious metals are on course to conclude a historic year, as both gold and silver are set to achieve their strongest annual gains since 1979. Silver prices have more than doubled, while gold has surged by about two-thirds, supported by increased purchases by central banks and inflows into gold-backed exchange-traded funds.

According to data collected by Bloomberg, gold-backed exchange-traded funds have seen increasing inflows over five consecutive weeks, while data from the World Gold Council indicates that total holdings in these funds have increased in every month of this year except May.

Gold quickly recovered after retreating from its peak in October, when the recent surge was seen as exaggerated. The Goldman Sachs Group is among several banks predicting that prices will continue to rise in 2026, placing a base case scenario at $4,900 per ounce with upside risks. It stated that ETF investors have started competing with central banks for limited physical supplies.

Dylan Wu, a strategist at Pepperstone Group Ltd, wrote in a note: "Central bank purchases, actual demand, and geopolitical hedging continue to serve as pillars over the medium and long term, while the actions of the Federal Reserve and real interest rates drive periodic volatility."

He added: "New players, such as stablecoin issuers like Tether and some corporate treasuries storing metals, are starting to allocate investments to gold. This broader capital base adds resilience to demand."

Surge in Silver and Platinum Prices

Silver surged by as much as 2.7% to record a new high of $68.9883 per ounce, bolstered by speculative inflows and ongoing supply imbalances across major trading hubs, following a historic selling pressure wave in October.

Total trading volume for silver futures in Shanghai earlier this month surged to levels close to those recorded during the crisis a few months ago.

Platinum continued its ascent for the eighth consecutive session, trading above $2,000 per ounce for the first time since 2008. This comes at a time when the metal, which has risen about 125% this year, has accelerated in recent days amid signs of tightening market conditions in London.

Banks are depositing larger quantities of the metal in the United States to hedge against tariff risks, while exports to China have been strong with demand growing and futures trading starting at the Guangzhou Futures Exchange.

Gold rose 1.5% in spot transactions to $4,404.12 per ounce as of 01:49 PM Singapore time. Silver increased by 2.5% to $68.85. Platinum climbed 4%, while palladium rose 4.4%. The Bloomberg Dollar Spot Index fell 0.1%.