Gold and silver hit new highs amid rate-cut hopes, geopolitical tensions

Growing rate-cut speculation in the US and heightened geopolitical tensions propelled precious metal prices to new highs on Monday, with gold topping the $4,400 mark for the first time in history.

Spot gold was up 1.6% at $4,411.30 an ounce by 0913 GMT, touching an earlier high of 4,420.01/oz, while silver was 2.6% higher at $68.91/oz.

Official data out last week showed that US consumer price inflation unexpectedly eased to 2.7% in November, down from 3.0% in September. While October's numbers are unavailable due to the government shutdown, the reading was still well below the 3.1% expected by analysts.

The US unemployment rate also rose to a four-year high of 4.6% in November, while the net addition of non-farm payrolls over October and November was far less than consensus forecasts due to a massive reduction in federal government employment.

Both datapoints have fuelled hopes that the Federal Reserve will continue its rate-cutting cycle early in 2026 to spur economic activity in the mid of softening price pressures.

Meanwhile, news that the US is pursuing another oil tanker offshore Venezuela as part of its clampdown on alleged drug-smuggling has spurred the demand for safe-haven assets like gold and silver, which have already surged 67% and 138% so far this year, respectively.

"A mix of political tension, shifting central bank policy, and concerns about the long-term health of the global economy pushed gold firmly back into the limelight," said Kate Marshall, lead investment analyst, Hargreaves Lansdown.

"In addition, central bank buying – particularly from emerging markets – has remained robust, helping to underpin prices. [...] Looking ahead, Goldman Sachs estimates that central banks will target around 20% of reserves in the precious metal, and China is currently at around 8%, which – alongside continued geopolitical uncertainty – should prop up the gold price, though we don’t expect the returns of this year, or last, to follow in 2026."

In addition, Neil Wilson, UK investor strategist at Saxo, said precious metals have been supported by "some end-of-year hedging by investors".