Gold and silver hit fresh record highs on Monday, driven by rising geopolitical tensions off the coast of Venezuela and growing expectations of US interest rate cuts.
The price of gold surged as high as $4,420 (£3,290) per troy ounce in early London trading, up almost 2pc on the day. The rally was sparked by actions ordered by Donald Trump, including the blockade and seizure of Venezuelan oil tankers, which prompted investors to rush into traditional safe-haven assets.
Traders fear that an escalation in tensions could increase volatility across US equities and the dollar. According to sources, the US attempted to intercept another oil tanker near Venezuela over the weekend, as pressure intensifies on Nicolás Maduro to relinquish power.
Gold prices have now almost doubled over the past two years amid mounting geopolitical stress, and are up 68pc so far this year alone — the fastest annual rise since 1979. Some analysts believe the rally still has room to run.
“Gold is rounding off the strongest annual performance for the yellow metal in four decades and today’s price action suggests that it is not done yet,” said Kathleen Brooks of XTB.
Silver also smashed records, climbing to $69.45 an ounce. The metal has surged 140pc this year, marking its fastest annual advance in 40 years. Prior to 2025, silver’s previous record stood at $37.72 an ounce, set in March 2011.
Expectations of further monetary easing by the Federal Reserve have added to the momentum. The Fed cut rates earlier this month after sustained political pressure for faster easing, and investors now expect another reduction early next year. Lower interest rates tend to reduce the appeal of US Treasuries, boosting the relative attractiveness of non-yielding assets such as gold and silver.
While US Treasury yields slipped last week on signs of easing inflation, bond markets elsewhere have come under pressure amid concerns that high-spending governments in Europe and Japan may struggle to rein in debt.
Bullish forecasts are mounting. Goldman Sachs now expects gold prices to reach at least $4,900 an ounce, while Kotak Securities believes the metal could hit $5,000.
Retail investors are also piling in. The World Gold Council reported that $5.3bn flowed into physically backed gold ETFs in November alone, lifting total ETF holdings to a record 3,932 tonnes worth around $530bn.
Demand has been particularly strong in Asia, according to metals broker Sharps Pixley, with wealthy investors increasingly using gold as collateral for equity and cryptocurrency trading, as well as lending bullion stocks to jewellers.
