December 23, World (LNW): Gold has surged to an unprecedented level, climbing beyond $4,400 (£3,275) an ounce for the first time as investors increasingly seek protection from economic and political uncertainty.
Market analysts attribute the rally largely to growing expectations that the US Federal Reserve will continue cutting interest rates next year. Lower borrowing costs tend to reduce the appeal of assets such as bonds, prompting investors to turn to commodities like gold as both a store of value and a portfolio diversifier.
At the start of the year, gold was trading at around $2,600 an ounce. Since then, a combination of geopolitical instability, renewed trade tensions linked to policies associated with President Donald Trump, and speculation over looser monetary policy has fuelled demand for traditional safe-haven assets. After breaching the $4,400 mark on Monday, spot gold briefly touched a peak of $4,426.66.
According to Adrian Ash, director of research at bullion marketplace BullionVault, gold has gained more than 68 per cent so far this year, marking its strongest annual rise since 1979. He said prolonged uncertainty surrounding interest rates, global conflicts and trade disputes has steadily pushed prices higher, with political pressures in the US acting as a major catalyst.
Expectations that the US will cut interest rates twice in 2026 have further strengthened the case for gold. At the same time, central banks around the world have continued to increase their physical gold reserves, seeking to hedge against financial volatility, reduce dependence on the US dollar and diversify reserve assets. Analysts at Goldman Sachs believe this trend is likely to extend into next year.
Financial planner Anita Wright of Ribble Wealth Management noted that gold often reacts quickly when confidence in economic policy and financial markets begins to falter. She added that the metal’s steady climb reflects concerns over inflation and broader economic instability. A weaker US dollar has also played a role by making gold more affordable for overseas buyers.
Other precious metals have also enjoyed an exceptional year. Silver rose to a fresh record of $69.44 an ounce on Monday and has more than doubled in value so far in 2025, while platinum has reached its highest level in 17 years. Analysts point out that, unlike gold, these metals benefit from strong industrial demand alongside investment interest.
Elsewhere in the commodities market, oil prices edged higher after the United States imposed tighter restrictions on sanctioned tankers linked to Venezuela. Brent crude rose $1.31 to $61.78 a barrel, while US crude gained $1.25 to reach $57.77. Despite the uptick, both benchmarks remain on course to finish the year below their levels at the beginning of 2025.
