Spot gold surged to break above the psychological milestone of $4,500 an ounce on Wednesday for the first time, as safe-haven demand and expectations of rate cuts kept bullion a favored asset.
Gold's status as a safe-haven asset has been enhanced over the past week due to intensifying geopolitical tensions, especially in Venezuela, where the US has intercepted oil tankers to increase pressure on President Nicolás Maduro's government.
So far this year, gold has soared 71% in a robust rally fueled by heightened central-bank purchases and significant inflows into gold-backed exchange-traded funds (ETFs). The metal is on track for its best annual performance since 1979. According to data from the World Gold Council, total holdings in gold-backed ETFs have increased every month this year except for May.
US President Donald Trump's aggressive approach to revamping global trade, along with his threats to the Federal Reserve's independence, has further propelled the bullish trend earlier in the year. Investors have also played a crucial role, partly driven by the "debasement trade"—a shift away from sovereign bonds and the currencies they are denominated in amid concerns that their value will diminish over time due to increasing debt levels.
After a pullback from its previous peak of $4,381 in October, when the rally was perceived as overextended, bullion has quickly rebounded and is now set to continue its gains into the next year. Goldman Sachs Group Inc. is among several banks predicting that prices will keep rising in 2026, forecasting a base scenario of $4,900 an ounce with potential for further escalation.
Silver also achieved another record, rising by as much as 0.43% to $71.79. The white metal's approximately 140% rally this year has been even more remarkable than gold's, bolstered by speculative inflows and persistent supply disturbances across major trading hubs after a historic short squeeze in October. The total trading volume for silver futures in Shanghai surged earlier this month to levels close to those seen during the peak of the crunch a couple of months ago.