Robin Paxton, Preeti Soni and Yvonne Yue Li
Gold, silver and platinum jumped to record highs, extending a historic end-of-year rally for precious metals, with support from escalating geopolitical tensions, US dollar weakness and thin market liquidity.
Spot gold rose as much as 1.6 per cent to a peak above $US4540 ($6759) an ounce on Friday. Spot silver for immediate delivery advanced for a fifth session, climbing as much as 7.6 per cent to cross $US77 ($114) an ounce.
Frictions in Venezuela, where the US has blockaded oil tankers and ramped up pressure on the government of Nicolas Maduro, have added to the precious metal’s haven appeal. Washington also launched a military strike against Islamic State in Nigeria in collaboration with the African nation’s government.
“Intensifying geopolitical tensions continued to underpin demand for safe-haven assets”, including gold and silver, said Daniel Takieddine, chief executive officer at Sky Links Capital Group. Year-end thin market liquidity also amplifies price swings, according to Takieddine.
The Bloomberg Dollar Spot Index, a key gauge of the US currency’s strength, was down 0.7 per cent for the week, its biggest drop since June. A weaker dollar is generally supportive of gold and silver.
Gold has gained around 70 per cent this year and silver more than 150 per cent, with both metals on track for their best annual performances since 1979. The scorching rally has been supported by elevated central bank purchases, inflows to exchange-traded funds, as well as three successive interest-rate cuts by the US Federal Reserve. Lower borrowing costs are a tailwind for precious metals, which don’t pay interest, and traders are betting on more rate cuts in 2026.
US President Donald Trump’s aggressive moves to remake global trade, along with threats to the Federal Reserve’s independence, added momentum to the rally earlier this year. Investor demand has also been underpinned by the so-called debasement trade as concerns over swelling debt loads drive a retreat from sovereign bonds and the currencies they are issued in.
Gold’s resilience was demonstrated by its quick recovery after retreating from a previous peak of $US4381 in October, when the rally was seen as overheated. Heavy ETF buying has been a major driver of the latest surge, with holdings in State Street’s SPDR Gold Trust — the biggest precious-metals ETF — rising by more than a fifth this year.
Silver’s rally has been even more spectacular than gold’s. Its recent advance has been buoyed by speculative inflows and lingering supply dislocations across major trading hubs following a historic short squeeze in October.
Vaults in London have drawn sizable inflows since the October squeeze, though much of the world’s readily available silver remains in New York as traders await the outcome of a US Commerce Department probe into whether imports of critical minerals pose a national security risk. The review could pave the way for tariffs or other trade curbs on the metal.
“You have a lot of trades or positions on paper: now you need to cover those with physical volume — and there’s not much supply to cover that demand,” said Manav Modi, commodity analyst at Motilal Oswal Financial Services. “You need to power the paper silver with the actual silver,” he said.
Partly for the same reason, platinum has been on a tear in recent weeks — this month alone, it has risen by more than 40 per cent. The metal traded above $US2400 an ounce for the first time since Bloomberg began compiling data in 1987.
In addition to strong physical demand, global supply of the metal used in the automotive and jewellery sectors is on course for a third annual deficit this year, due largely to disruptions in major producer South Africa.
Bloomberg
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