Behind the record-breaking gold price: three forces working together to push up the precious metal

On Monday, Asian markets opened, and precious metals continued their strength, with silver leading the rally. Silver prices surged 1.3% to $68.05 per ounce, hitting a record high, while spot gold also accelerated its short-term gains, approaching $4372 per ounce, up $33 intraday.

This rally is not accidental. Market analysis from Bloomberg indicates that the current driving forces behind the rise in precious metals come from three aspects: first, market expectations that the Federal Reserve will maintain an easing policy next year; second, escalating geopolitical tensions boosting safe-haven demand; third, structural tightness in silver supply.

Easing Expectations Ignite the Market

After weak economic data last week, traders readjusted their expectations, and a consensus has formed that the Fed will cut interest rates at least twice by 2026. Gold and silver, which do not pay interest, are naturally sensitive to falling interest rates, and lower financing costs directly stimulate investment demand. Capital Edge data shows that rate cut expectations have already increased significantly.

Meanwhile, this year, precious metals have accumulated considerable gains—silver has more than doubled since the beginning of the year, and gold has risen over 60%, marking the strongest annual performance since 1979.

Safe-Haven Asset Appeal

The ongoing escalation of geopolitical tensions has also reinforced the safe-haven role of precious metals. The US has imposed stricter sanctions on Venezuela’s oil, while Ukraine attacked Russian “shadow fleet” tankers in the Mediterranean, further boosting risk sentiment.

Central banks and institutional funds’ flows confirm this trend. Gold ETFs have recorded net inflows for five consecutive weeks. Data from the World Gold Council shows that, except for May, fund holdings have been rising each month. Recently, silver has also benefited from surging demand and supply mismatches at major trading centers.

Goldman Sachs Bullish Outlook for Next Year

Analysts Daan Struyven and Samantha Dart predict in their report that gold prices will further rise next year, with a baseline target of $4900 per ounce, with greater upside risks. The report also notes that ETF investors are competing with central banks worldwide for limited physical gold bar supplies, and supply-side pressures will support prices.

Technical Outlook

From a technical perspective, FXStreet analyst Christian Borjon Valencia believes that to sustain the upward momentum, gold must break through the historical high of $4381 per ounce and challenge $4400. Once above $4400, there is room to rise to $4450 and $4500.

Conversely, if gold falls below $4300, traders will focus on support levels at the December 11 high of $4285, the psychological level of $4250, and $4200.

The current spot gold price is $4372.40 per ounce, just one step away from the October record high of $4381. Precious metals’ performance at year-end remains a market focus.