A surge in geopolitical tensions and expectations of US rate cuts drove the price of gold and silver to all-time highs on Monday.
Gold soared past the $4,400-per-ounce level for the first time, propelled by further safe-haven buying, while silver also rose to a new record high.
Spot gold climbed 2% to $4,426.66 per ounce as of 1313 GMT, after hitting a record high of $4,420.01 earlier in the session, Reuters reported, while US gold futures for February delivery rose 1.5% to $4,451.60 per ounce.
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Bullion has surged nearly 68% this year, marking its biggest annual rise since 1979, fuelled by strong central bank buying, safe-haven flows, and lower interest rates.
Spot silver climbed 3.1% to $69.18 after hitting a new record high of $69.44 earlier in the session.
Silver has risen 139% in the year to date, driven by an ongoing supply deficit, growing industrial needs and strong investment demand.
China condemns seizure of 2nd Venezuelan tanker
China’s foreign ministry on Monday said the United States’ seizure of another country’s ships was a serious violation of international law, after the US intercepted a China-bound oil tanker off the Venezuelan coast.
Venezuela has the right to develop relations with other countries, China’s foreign ministry spokesperson Lin Jian said at a daily press briefing, adding that China opposes all “unilateral and illegal” sanctions.
On Saturday, the US Coast Guard intercepted a second oil tanker in international waters off the Venezuelan coast, days after President Donald Trump announced a “blockade” of all sanctioned oil tankers entering and leaving Venezuela.
The tanker, Centuries, loaded in Venezuela under the false name “Crag” and was carrying some 1.8 million barrels of Venezuelan Merey crude oil bound for China, documents showed.
The crude was bought by Satau Tijana Oil Trading, one of many intermediaries involved in Venezuelan state oil company PDVSA’s sales to Chinese independent refiners, the documents showed.
A White House spokesperson said the “falsely flagged vessel” carried sanctioned oil and was part of Venezuela’s shadow fleet.
The Venezuelan government called the tanker interception a “serious act of international piracy.”
China is the biggest buyer of Venezuelan crude, which accounts for roughly 4% of its imports.
Another notable element in US-China tensions was the State Department’s approval for an $11-billion weapons package for Taiwan last week.
Beijing expressed strong dissatisfaction last Thursday, saying the military aid, which still needs approval from Congress, should be immediately stopped.
Lower US rates
Prices for other commodities, such as copper and platinum, have soared recently. But bets on US rate cuts are also a factor in boosting demand for gold and silver, analysts said.
“Lower rates are supporting the demand for real assets like gold and silver. But we also have copper at a record high, indicating a desire by investors to hold exposure to broad commodities, likely due to expectations that inflation could stay higher for longer,” UBS analyst Giovanni Staunovo said.
Federal Reserve Governor Stephen Miran reiterated Friday that the US central bank should cut interest rates because inflation has cooled and monetary policy needs to offset risks to the job market.
While gold is seen as a hedge against inflation and a safe asset during uncertain times, the non-yielding asset also tends to benefit in lower interest rate environments.
“This is self-fulfilling momentum, but if there is one key fundamental element I would point to, it would be President Trump’s reported use of the word ‘war’ last week with respect to Venezuela, after running on an election ticket revolving in part around the word ‘peace’,” StoneX analyst Rhona O’Connell said.
Meanwhile, the US dollar inched lower, and is on pace for its steepest annual decline since 2017, making gold more affordable for overseas buyers.
“Our outlook for gold remains that the yellow metal should reach even higher levels next year, with a target at $4,500/oz,” Staunovo added.
Elsewhere, platinum jumped 5% to $2,072.01, hitting its highest in more than 17 years, while palladium climbed 3.7% to $1,776.69, hitting a near three-year high.
Reuters with additional input and editing by Jim Pollard
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