Precious metals surge! Gold approaches historic highs, and silver hits record-breaking new highs—three major drivers behind the surge

Market Status: Gold and Silver Both Strengthen

Shortly after the Asian market opened, precious metals experienced a noticeable rally. Spot gold prices have approached the $4,372 per ounce level, significantly higher than the previous trading day. Meanwhile, silver moved in tandem, with a 1.3% increase to $68.05 per ounce, hitting a record high.

What is particularly noteworthy about this round of rally is that gold is just one step away from the October record high of $4,381 per ounce, and the market widely expects this key resistance to be broken. Since the short squeeze last year, speculative funds in silver have continued to flow in net, and supply tensions have not eased, further supporting silver prices. Trading activity in Shanghai silver futures has heated up again, with trading volume approaching levels seen during the tight supply period two months ago.

Driving Factors: Rate Cut Expectations + Geopolitical Safe-Haven

The logic behind this gold rally is not complicated. On one hand, the Federal Reserve’s policy outlook has shifted towards easing. Last week’s economic data was lackluster, and traders are increasingly confident that the Fed will implement two rate cuts by 2026. The looser monetary environment directly benefits non-yielding assets like gold and silver.

On the other hand, escalating geopolitical tensions have rekindled capital’s pursuit of safe-haven assets. The US has intensified its oil embargo on Venezuela, and incidents such as Ukraine attacking Russian “shadow fleet” tankers in the Mediterranean have increased market uncertainty expectations, thereby enhancing the safe-haven appeal of precious metals.

Long-Term Trend: Historic-Level Gains

On an annual basis, gold and silver are creating their strongest performances since 1979. Silver has doubled since the beginning of the year, while gold has gained about two-thirds. Three forces are driving this: continuous central bank gold reserve accumulation, steady inflows into physical gold ETFs, and recent benefits for silver from surging demand and improved liquidity.

According to Bloomberg data, gold ETFs have seen net inflows for five consecutive weeks; the World Gold Council reports that, except for May, holdings in precious metal funds have increased every month this year. This reflects institutional and retail recognition of the long-term value of gold allocation. Goldman Sachs analysts recently stated that gold could further rise next year, with a baseline target of $4,900 per ounce, and the upside risks are more prominent. Industry observers even note that ETF investors are competing with central banks worldwide for limited physical gold bar supplies.

Technical Outlook: Resistance and Support

From a technical perspective, market analyst Christian Borjon Valencia pointed out that if gold can hold above the historic high of $4,381 per ounce, it will further open the space for upward movement. After breaking through, potential targets include $4,400, $4,450, and $4,500 per ounce.

However, downward risks should not be overlooked. If the gold price falls below $4,300 per ounce, traders may test the December 11 high of $4,285 per ounce consecutively, followed by psychological levels at $4,250 and $4,200. These levels will serve as important defensive lines for the bulls.