Gold hits all-time high, propelled by US rate-cut hopes

FE Team | Published: December 22, 2025 22:48:54

LONDON, Dec 22 (Reuters): Spot gold surged to a record high of $4,383.73 per ounce on Monday, lifted by expectations of further US Federal Reserve rate cuts after last week's quarter-point reduction, sustained safe-haven demand, and a softer dollar.
Gold, a traditional safe-haven asset, is up 67 per cent for the year, driven by geopolitical and trade tensions, robust central bank buying and hopes of lower interest rates next year, while a lower dollar index has also helped by making the precious metal less expensive for overseas buyers.
Investors are currently pricing in two US rate cuts in 2026, boosting non-yielding gold's appeal.
Bullion has surged nearly 68 per cent this year, marking its biggest annual rise since 1979, fuelled by strong central bank buying, safe-haven flows, and lower interest rates.
Spot silver climbed 3.1 per cent to $69.18 after hitting a new record high of $69.44 earlier in the session.
Silver has risen 139 per cent year-to-date, driven by an ongoing supply deficit, growing industrial needs and strong investment demand.
"Lower rates are supporting the demand for real assets like gold and silver. But we also have copper at a record high, indicating a desire by investors to hold exposure to broad commodities, likely due to expectations that inflation could stay higher for longer," said UBS analyst Giovanni Staunovo.
Federal Reserve Governor Stephen Miran reiterated Friday that the US central bank should cut interest rates because inflation has cooled and monetary policy needs to offset risks to the job market.
While gold is seen as a hedge against inflation and a safe asset during uncertain times, the non-yielding asset also tends to benefit in lower interest rate environments.
"This is self-fulfilling momentum, but if there is one key fundamental element I would point to, it would be President Trump's reported use of the word 'war' last week with respect to Venezuela, after running on an election ticket revolving in part around the word 'peace'," StoneX analyst Rhona O'Connell said.
Meanwhile, the US dollar inched lower, and is on pace for its steepest annual decline since 2017, making gold more affordable for overseas buyers.
"Our outlook for gold remains that the yellow metal should reach even higher levels next year, with a target at $4,500/oz," Staunovo added.
Elsewhere, platinum jumped 5.4 per cent to $2,079.25, hitting its highest in more than 17 years, while palladium climbed 2.7 per cent to $1,759.75, hitting a near three-year high.