Gold surged to a new record high on Tuesday, marking its 50th record-breaking day this year, as investors awaited further developments amid escalating geopolitical tensions and the prospect of another US interest rate cut. Silver also climbed to a record high.
Bullion broke above $4,480 an ounce for the first time, after gaining 2.4% in the previous session, its biggest one-day rise in more than a month.
Traders are betting that the Federal Reserve will cut borrowing costs again next year, creating a low-interest environment that would benefit non-yielding precious metals.
Gold's appeal as a safe haven was boosted last week by escalating geopolitical tensions, particularly in Venezuela, where the United States imposed a blockade on oil tankers as part of its increased pressure on President Nicolas Maduro's government.
Gold has gained 70% this year in a sharp upward surge fueled by increased central bank purchases and inflows of funds into bullion-backed exchange-traded funds.
The metal is on track to record its best annual performance since 1979. According to data from the World Gold Council, total holdings in gold-backed exchange-traded funds have increased in every month this year except May.
A rise driven by politics and investment flows
US President Donald Trump’s aggressive moves to reshape global trade, along with his threats to the independence of the Federal Reserve, contributed to fueling the upward surge earlier this year.
Investors also played a crucial role, driven in part by what is known as the currency devaluation trade, i.e., moving away from sovereign bonds and currencies denominated in them, due to fears that their value will erode over time as a result of ballooning debt levels.
Gold recovered quickly after retreating from its previous peak of $4,381 in October, when the market deemed the rally overdone. The precious metal is now well-positioned to continue these gains into next year.
Goldman Sachs, along with several other banks, expects prices to continue rising in 2026, having issued a baseline scenario of $4,900 per ounce with upside risks.
Silver prices hit record highs
Silver also hit a new record high, rising as much as 1% to $69.7060. The white metal's nearly 140% surge this year has been even more dramatic than gold's, fueled in its latest phase by speculative inflows and ongoing supply disruptions across major trading hubs following a historic sell-off in October.
The total trading volume for silver futures contracts in Shanghai rose earlier this month to levels close to those recorded during the crisis two months ago.
Spot gold rose 0.8% to $4,479.25 an ounce by 9:20 a.m. in Singapore. Silver gained 0.5% to $69.39. Platinum climbed 0.7%, and palladium rose 0.2%, while the Bloomberg Dollar Index slipped 0.1%.
