Quick overview

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Increased geopolitical tensions and wagers on further rate cuts by the Federal Reserve contributed to gold’s record-breaking yearly performance in over 40 years. The previous record of $4,381 per ounce set in October was surpassed by the precious metal, which increased by more than 1%.

 

Spot gold increased by 1.1 percent to $4,386.32 per ounce. Metal traders are betting that the Fed will cut interest rates twice in 2026 after a barrage of economic data last week did little to clarify the outlook, despite US President Donald Trump’s advocacy for aggressively lowering rates.

Gold and silver, which don’t pay interest, benefit greatly from looser monetary policy. The appeal of gold and silver as havens has also increased due to the recent escalation of geopolitical tensions.

While Ukraine launched its first attack on an oil tanker from Russia’s shadow fleet in the Mediterranean Sea, the US has tightened its oil embargo against Venezuela and increased pressure on President Nicolás Maduro’s administration.

Both of these precious metals are expected to see their biggest yearly increases since 1979.

Increased central bank purchases and inflows into exchange-traded funds backed by bullion have supported the roughly two-thirds increase in gold prices.

According to data compiled by Bloomberg, inflows into gold-backed ETFs have increased for five consecutive weeks, and World Gold Council figures indicate that total holdings in these funds have risen every month this year, except May.

Gold has rapidly recovered after retreating from its peak in October, when the rally was perceived as being overheated. The Goldman Sachs Group, Inc. is one of several banks that forecast that prices will continue to rise in 2026, offering a base-case estimate of $4,900 per ounce with upside risks. It stated that investors in ETFs are beginning to vie with central banks for the scarce physical supply.