Rate cut bets and safe-haven flows keep gold and silver climbing to fresh multi-year highs
Gold has surged to record levels above US$3,500 an ounce, with analysts pointing to imminent US interest rate cuts and rising geopolitical risks as the main drivers.
According to Reuters, spot gold rose 1.5 percent on Tuesday to US$3,529.01 after briefly touching US$3,529.93, while US gold futures for December delivery settled 2.2 percent higher at US$3,592.2.
Bloomberg reported that bullion extended a six-day rally on Tuesday, reaching as much as US$3,540.04 before holding near US$3,530.
CNBC added that US gold futures touched US$3,600 on Wednesday morning, underscoring the strength of the rally.
Since January, spot gold prices have climbed nearly 35 percent, according to CNBC, making the metal one of the best-performing commodities of 2025.
Analysts said this rise reflects widespread expectations of Federal Reserve rate cuts, with the CME FedWatch tool showing markets pricing in almost a 90 percent chance of a September reduction.
Wall Street anticipates up to three cuts before year-end.
Deutsche Bank’s Jim Reid said in a note that “this surge is largely driven by anticipation of rate cuts and persistent inflation fears, reinforcing their role as classic inflation hedges and safe havens during turbulent times.”
Institutional and central bank activity has further supported the rally.
Bloomberg reported that central banks now hold more gold than US Treasurys for the first time since 1996, while demand from China and India is accelerating.
Nick Lawson, CEO of Ocean Wall, said gold had “converging tailwinds from central banks, pensions, insurers and sovereign wealth funds, setting the stage for the next major leg higher.”
Krishan Gopaul of the World Gold Council told CNBC that inflows into gold ETFs and steady central bank buying were keeping prices elevated.
He added that uncertainty around Federal Reserve independence, heightened by US President Donald Trump’s criticism of Jerome Powell and efforts to remove Fed Governor Lisa Cook, was adding to the appeal of gold as a hedge.
ETF inflows remain a critical factor.
Reuters reported that SPDR Gold Trust, the world’s largest gold-backed ETF, saw holdings rise 1.01 percent on Friday to their highest level since August 2022.
Natasha Kaneva, head of global commodities strategy at J.P. Morgan, said central bank buying may hold the floor for prices.
However, ETF inflows would be needed for a breakout toward their year-end target of US$3,675 per ounce. Longer-term projections are as high as US$4,250 by the end of 2026.
Strategists at UBS wrote in a Tuesday note that gold could benefit from falling yields and sustained central bank purchases, with a target of US$3,700 per ounce by June 2026 and a potential rise to US$4,000 if geopolitical or economic conditions worsen.
Wellington Management’s Supriya Menon told CNBC that gold remained overweight in multi-asset portfolios as a diversifier against equities and fixed income.
Silver has also rallied sharply.
Bloomberg reported that prices breached US$40 an ounce for the first time since 2011, up about 40 percent this year.
The Silver Institute warned of a fifth consecutive annual market deficit due to strong industrial demand, particularly from clean-energy technologies such as solar panels.
