Historical records on precious metals markets: geopolitics and a weak dollar trigger a rally to new highs

Geopolitical Instability Fuels Flight to Safe-Haven Assets

The global geopolitical landscape has significantly deteriorated in recent weeks, prompting investors to seek protection through traditional safe-haven assets. Recent developments in Venezuela, with “maximum” US sanctions announced at the UN and military movements in the Caribbean, combined with escalation in Ukraine where Russia intensifies attacks on energy infrastructure, have fueled a substantial risk aversion in global markets. This climate of uncertainty has created a particularly favorable environment for precious metals, turning them into the preferred refuge for those seeking stability in volatile times.

An Unprecedented Weakness of the Dollar

Alongside geopolitical events, the US dollar is experiencing an extraordinary period of weakness. On Tuesday, the dollar index fell by 0.36%, marking the second consecutive day of decline and hitting an intraday low of 97.85, the lowest since October 3. Projections for the current month indicate a decline of 1.4%, the most significant since August, while on an annual basis, the US currency is expected to drop by 9.6%, the worst result since 2017.

Experts at Mitsubishi UFJ Financial Group highlight that this is not merely a temporary correction but a reflection of a long-term structural phenomenon. Despite the US GDP in the third quarter surprising to the upside with an annualized growth of 4.3% compared to expectations of 3.3%, this data has not been able to reverse the negative sentiment towards the currency. On the contrary, the market remains focused on the Federal Reserve’s rate reduction prospects: according to estimates from the London Stock Exchange Group, the probability of no rate cut at the end-January meeting stands at 87%, although futures suggest the next move could occur in June 2026. Additional downward pressure comes from the US consumer confidence index for December, which plummeted by 3.8 points to 89.1, well below expectations of 91.0.

Precious Metals Reach Extraordinary Valuations

As the dollar retreats, precious metals are experiencing an extraordinary expansion phase. In the silver segment, the rally has been particularly pronounced: on Tuesday, the spot price gained nearly 3%, stabilizing at $71.06 per ounce and reaching an intraday high of $71.55 during the session. Throughout Wednesday’s Asian morning (December 24), the rally continued unabated, with the price updated to $71.83 per ounce at 07:40 (UTC+8). Since the beginning of December, silver has appreciated by over 27%, while the year-to-date increase reaches 150%.

Regarding gold, the upward movement has been equally significant: on Tuesday, the spot price rose by 0.9%, approaching $4,500 and setting new all-time highs at $4,484.50 per ounce. On Wednesday morning, the rally persisted, with the price reaching a new record of $4,509.90 per ounce at 08:00 (UTC+8). On an annual basis, gold has appreciated by 72% since January 2025.

Platinum and palladium have also actively participated in this expansion phase. Platinum jumped 7.5% on Tuesday to $2,283, reaching a morning high of $2,287.33. On Wednesday, the trend continued with the price surpassing $2,300, reaching $2,334 per ounce (+ 2.2%) at 07:40. Over the previous week, platinum gained 13%, in the current week 18%, while from the beginning of December and the start of the year, the changes are 39% and 155%, respectively. Palladium, for its part, rose 5.7% on Tuesday, stabilizing at $1,859.38 (highest in three years). On Wednesday morning, it continued to appreciate by 1.74%, with the price updated to $1,897.73 per ounce, confirming an annual performance of 107%.

Underlying Factors: Limited Supply and Robust Industrial Demand

The extraordinary performance of precious metals is not accidental. Industry experts emphasize that the silver market has long operated under scarcity conditions, while increasing industrial demand is the main driver of price dynamics. The automotive and electronics sectors, in particular, continue to lead purchases, providing structural support for prices. Peter Grant, vice president and senior strategist at Zaner Metals, highlights that the next target for silver could be around $75, though he warns that year-end profit-taking could lead to short-term corrections.

Regarding gold, support reflects both its role as a safe haven and expectations for global monetary policies. The combination of persistent geopolitical tensions, strong central bank purchases worldwide, and growing investment demand has solidified gold’s position as the preferred “safe port” for investors amid economic uncertainty.

Short-Term Outlook and Cautions

Erik Bregar, head of precious metals risk management at Silver Gold Bull, anticipates further dollar weakening in the first quarter of next year, driven by signals of weakness in the US labor market that could prompt the Federal Reserve to expand policy concessions. However, Tom Simons, US chief economist at Jefferies, warns that despite seemingly solid GDP data, significant downward revisions could occur, with Q4 potentially showing a sharp slowdown in the economy.

On Wednesday, Christmas Eve, most Western markets will observe early or full closures, with low liquidity that could generate strong volatility swings. Investors should therefore exercise particular caution and closely monitor Federal Reserve dynamics and geopolitical developments to identify positioning opportunities in this context characterized by structural uncertainty but supported by persistent safe-haven demand.

At 08:04 (UTC+8), the spot gold price stands at $4,510.34 per ounce, confirming the upward trend continuing to characterize precious metals markets.