Gold Price Reaches New Record Above $4,400
The price of gold has surpassed $4,400 (£3,275) per ounce, marking a new record high. On Monday, the spot price of gold reached $4,420 before a subsequent decline.
Gold commenced 2025 at $2,600 an ounce and has since increased by over 68% this year. This represents the most significant annual increase since 1979.
Factors Influencing Gold's Ascent
Several factors have been identified as contributing to the increased demand for gold as a safe-haven asset:
- Geopolitical Tensions: Ongoing global political instabilities have contributed to investor demand.
- Trade Policies: Specific trade policies and related tensions have influenced market sentiment.
- Interest Rate Expectations: Anticipation that the US central bank will implement further interest rate reductions in the coming year has been a factor. Lower interest rate environments typically lead to reduced returns on alternative investments like bonds, prompting investors to seek commodities for both returns and portfolio diversification. Analysts currently project two interest rate cuts by the US in 2026.
- Central Bank Holdings: Global central banks are reportedly expanding their physical gold reserves. Analysis from Goldman Sachs indicates this trend, which aims to counteract economic volatility, decrease reliance on the US dollar, and diversify national portfolios, is expected to continue into 2026.
- Inflation and Economic Turmoil: Gold is viewed by some as a protective asset against inflation and broader economic instability. According to Anita Wright, a chartered financial planner, gold tends to respond first when confidence in financial assets and policy stability diminishes.
- Weaker US Dollar: A decline in the value of the US dollar renders gold more affordable for international purchasers, thereby increasing demand.
Performance of Other Precious Metals
Other precious metals have also experienced substantial gains:
- Silver: The price of silver reached a record $69.44 per ounce on Monday. Year-to-date in 2025, silver has seen a 138% increase.
- Platinum: Platinum prices have reached a 17-year high.
Unlike gold, silver and platinum also benefit from strong industrial manufacturing demand, which contributes to their price appreciation and supply constraints.
Oil Market Activity
Separately, oil prices advanced on Monday following a US order last week to block sanctioned oil tankers. Brent crude increased by 53 cents to $60.99 per barrel, while US oil rose by 1.6% to $57.40. Despite these recent gains, both Brent crude and US oil are projected to conclude 2025 at prices lower than their starting points for the year.