Rate-cut expectations + geopolitical tensions push gold, silver and copper all to record highs
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- Geopolitical tensions and additional US rate-cut expectations pushed prices of major metals such as gold, silver, and copper to record highs.
- Expanded central bank purchases and inflows into ETFs are further fueling the rise in gold prices.
- Major investment banks, including Goldman Sachs, expect gold prices to continue rising through next year.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
Geopolitical tensions and growing expectations of additional US rate cuts have driven precious metals and metal prices such as gold, silver and copper to new record highs.
On the 22nd (local time) in the Singapore market, the spot price of gold rose 1.5% to 4404 dollars per ounce, surpassing the previous record of 4381 dollars per ounce set in October. Silver prices at one point rose 3.4%, nearing 70 dollars per ounce and hitting an all-time high. Platinum also extended an eight-trading-day winning streak, breaking through 2,000 dollars for the first time since 2008.
Copper prices on the day also approached 12,000 dollars per ton. Copper's annual gain this year is also expected to be the highest since 2009.
According to Bloomberg, the market expects the US Federal Reserve to cut interest rates twice in 2026 based on last week's US economic data. In general, rate cuts are a factor that boosts prices of non-yielding precious metals.
In addition, rising geopolitical tensions in recent weeks have increased the appeal of gold and silver as safe-haven assets. The US is tightening its oil blockade on Venezuela, increasing pressure on President Nicolás Maduro's government. Ukraine for the first time attacked an oil tanker belonging to Russia's covert fleet in the Mediterranean, showing that ceasefire negotiations will not be easy.
Gold and silver are forecast to record their biggest annual gains since 1979. Gold prices have surged more than 60%, helped by expanded central bank purchases and inflows into gold-backed exchange-traded funds (ETFs). President Trump's aggressive tariff policies and threats to the Fed's independence have fueled the surge in gold prices.
Part of the rise in gold prices is also attributed to so-called "currency depreciation trades." Currency depreciation trades refer to the movement of funds out of currency assets due to concerns that national debt increases will erode the value of government bonds and the listed currency over time.
Bloomberg data show that inflows into gold ETFs have increased for 5 consecutive weeks. The World Gold Council (WGC) said total assets of gold ETFs have increased every month this year except June.
Dillin Wu, a strategist at Pepperstone Group, analyzed, "Today's rise in precious metals is mainly the result of initial positioning on rate-cut expectations combined with year-end liquidity shortages." She added that weak US job growth in November and lower-than-expected inflation also support the possibility of additional rate cuts.
Investment banks including Goldman Sachs expect gold prices to remain on an upward trend through next year. Goldman Sachs said gold prices could rise to 4900 dollars next year.
The recent rise in silver prices is due to speculative inflows and supply imbalances at major trading hubs following October's record short squeeze. Shanghai silver futures trading volume surged earlier this month, approaching levels seen during the short squeeze a few months ago.
Platinum prices, which have risen about 125% so far this year, are accelerating further amid signs of supply shortages in the London market. US-based traders are stockpiling platinum to hedge against the risk of tariffs.
Kim Jeong-a, contributing reporter kja@hankyung.com
