Precious metals markets witnessed a historic surge on Monday, with gold and silver prices scaling unprecedented peaks. The rally was fuelled by escalating geopolitical tensions and strong investor demand for safe-haven assets.
Historic Highs for Gold and Silver
Spot gold jumped 2.2% to settle at $4,434.26 per ounce, after earlier touching a lifetime high of $4,441.92. Similarly, U.S. gold futures for February delivery closed 1.9% higher at $4,469.40 per ounce. Not to be outdone, silver prices surged 1.9% to $68.40, having hit a fresh record of $69.44 earlier in the session.
This remarkable ascent places gold on track for its most significant annual gain since 1979, with prices soaring more than 69% this year. Silver has performed even more spectacularly, registering an increase of over 136% year-to-date.
Geopolitical Tensions and Economic Factors Drive Rally
Analysts point to multiple converging factors behind the bull run. The immediate catalyst is the heightened friction between the United States and Venezuela. Last week, U.S. President Donald Trump announced a blockade targeting oil tankers under sanctions to and from Venezuela, amplifying market uncertainty.
"Support in the near-term is coming from raised geopolitical tensions between the U.S. and Venezuela," explained an analyst from Nemo.Money. They added that after hovering near record levels, gold experienced a classic momentum breakout in holiday-thinned markets.
Further supporting the bullish sentiment are expectations of a change in leadership at the U.S. Federal Reserve. Reports suggest President Trump could appoint a new Fed Chair by early January, replacing Jerome Powell, whose term ends in mid-2026. Markets anticipate the new appointee may favour further interest rate cuts, a scenario that typically benefits non-yielding assets like gold.
Broader Precious Metals Complex Shines
The rally was not confined to gold and silver. The entire precious metals spectrum witnessed robust gains. Platinum leaped 5.4% to $2,079, marking its highest level in over 17 years. Palladium also climbed, gaining 2.1% to reach $1,748.84, a near three-year peak.
Macquarie strategists highlighted that silver's surge is underpinned by a persistent supply-demand deficit. A key demand driver is the growing import appetite from India during its ongoing festive season. The strategists project silver to average $57 an ounce in 2026.
A slightly weaker U.S. dollar, which makes dollar-denominated bullion cheaper for holders of other currencies, provided an additional tailwind for the metals complex.
With the bullish momentum firmly in place and analysts setting their sights on the $5,000 mark for gold in the coming year, investors are closely watching geopolitical developments and central bank policies for the next directional cue.
