Gold broke through the 4,450 US dollar mark, and silver is approaching the 70 dollar mark! Precious metals's epic rise continues under the “dual-core drive” of interest rate cuts and geopolitical conflicts

The Zhitong Finance App learned that with the escalation of geopolitical tension and bets that the Federal Reserve will cut interest rates further, gold and silver prices have soared to record highs, adding impetus to the strongest annual performance in more than 40 years.

The price of gold once rose 2.4%, breaking the previous record of 4,381 US dollars per ounce set in October; the price of silver once soared 3.4%, approaching the 70 US dollar mark per ounce. The move continued their intense gains, and both metals are firmly on their way to their strongest annual performance since 1979.

The latest upward momentum comes from traders betting that the Federal Reserve will cut interest rates twice in 2026, and US President Donald Trump is also advocating a more relaxed monetary policy. Lower interest rates are generally beneficial to precious metals that do not pay interest.

Escalating geopolitical tensions have also strengthened the safe-haven appeal of gold and silver. The United States has tightened its oil blockade against Venezuela, increased pressure on President Nicolás Maduro's administration, and Ukraine has attacked an oil tanker from Russia's “shadow fleet” in the Mediterranean for the first time.

Dilin Wu, strategist at Pepperstone Group Ltd, said: “Today's rise was mainly driven by early position layouts surrounding expectations of the Fed's interest rate cut, and amplified by scarce liquidity at the end of the year.” She pointed out that weak employment growth in November and lower-than-expected US inflation data supported expectations of further interest rate cuts.

Since this year, the price of gold has soared 67%, thanks to increased central bank purchases and inflows into gold-backed exchange-traded funds (ETFs). Trump's aggressive moves to reshape global trade, as well as his threat to the independence of the Bank of America, also added fuel to the fiery gains made earlier this year.

Investors also played an important role in the rise in gold, partly due to so-called “currency depreciation transactions”, and investors withdrew from these assets due to concerns that the value of sovereign bonds and their denominated currencies would be damaged over time due to rising debt levels. According to data, gold-backed ETFs have seen capital inflows for the past four consecutive weeks. According to data from the World Gold Council, with the exception of May, the total holdings of these funds have been rising every month since this year.

Other precious metals also rose sharply. Palladium once surged 7.1%, reaching its highest level in nearly three years. Platinum rose for the eighth consecutive trading day, breaking the $2,000 per ounce mark for the first time since 2008.

Gold quickly rebounded after falling from its peak in October (when gains were considered overcrowded and overheated), and is now ready to carry these gains into next year. Goldman Sachs Group is one of several banks that predict that prices will continue to rise in 2026. The basic scenario issued is a target price of $4,900 per ounce, and there is an upward risk. ETF investors are starting to compete with the central bank for limited physical supply, the bank said.

Pepperstone's Wu said that central bank purchases, physical demand, and geopolitical hedging are “medium- to long-term anchoring factors, while Federal Reserve policies and real interest rates continue to drive cyclical fluctuations.” In her report, she notes that new entrants to the gold market, such as stablecoin issuers such as Tether Holdings SA and some corporate finance departments, are creating a “broader capital base” and “increasing the resilience of demand.”

Silver's recent rise was supported by speculative capital inflows and continued supply misalignment in major trading centers after the historic shortfall in October. Earlier this month, the total trading volume of Shanghai silver futures surged to close to the level seen during the tense period a few months ago.

Platinum has recently accelerated its rise due to signs of tightening in the London market. It has risen by about 124% this year. Banks are storing more metals in the US to hedge against tariff risks, while exports to China have remained strong as demand grew and trading contracts began on the Guangzhou Futures Exchange.

As of press time, spot gold rose 0.26% to $4,456 an ounce. Silver rose 0.16% to $69.18 an ounce. The Bloomberg Dollar Spot Index fell 0.03%.

Nicholas Frappell, head of global institutional marketing at ABC Refinery in Sydney, said that the main factors affecting the market are the prospects for further interest rate cuts and “geopolitical concerns, particularly around Ukraine and the Trump administration's recent national security strategies.” He added that the tense relationship between Japan and China and the situation in Venezuela also supported gold.