Gold prices surged above $4,500 an ounce for the first time on Wednesday, extending a historic rally as investors moved into safe-haven assets. The advance was driven by rising geopolitical tensions and firm expectations that the U.S. Federal Reserve will deliver additional interest rate cuts next year.
The rally was further amplified by thin trading conditions during a holiday-shortened week, leaving markets more sensitive to geopolitical and macroeconomic headlines.
Spot gold was last seen 0.3% lower at $4,473.06 an ounce by 09:40 ET, after briefly touching a record high of $4,525.96 earlier in the session. Meanwhile, February gold futures edged up 0.1% to $4,500.60 an ounce, reflecting continued bullish sentiment.
Geopolitical tensions and Fed rate cut bets support gold
Demand for gold as a safe-haven asset strengthened amid renewed geopolitical frictions, including escalating tensions between the United States and Venezuela. Recent actions targeting Venezuelan oil shipments and the subsequent response from Caracas have unsettled global markets and raised concerns over regional stability and supply disruptions.
Such periods of uncertainty have historically supported gold prices, as investors seek protection in assets viewed as long-term stores of value.
Expectations for looser U.S. monetary policy have also played a central role. Markets continue to price in Federal Reserve rate cuts in 2026, even after recent data highlighted strong momentum in the U.S. economy.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making bullion more attractive compared to bonds and cash.
Strong U.S. growth fails to derail rally
Data released this week showed the U.S. economy expanded at an annualized pace of 4.3% in the third quarter, underlining resilience in consumer spending and business activity. While the figures reinforced confidence in the economic outlook, they failed to curb gold’s advance, as investors focused on the longer-term direction of interest rates rather than short-term growth strength.
Holiday trading raises volatility risk
Trading activity remained subdued across major financial centers ahead of the Christmas holidays. U.S. markets were set to close early on Wednesday for Christmas Eve and remain closed on Thursday, while participation also thinned across Europe and parts of Asia.
Traders cautioned that reduced liquidity could exaggerate price movements, increasing the risk of sharp swings in either direction.
Silver and copper hit fresh highs
The bullish sentiment extended to other metals. Spot silver climbed more than 0.9% to a record high of $72.10 an ounce, while platinum slipped 0.7% to $2,278 an ounce after earlier reaching $2,381.20.
Industrial metals also benefited, with London Metal Exchange copper futures rising 1.1% to a record $12,060.50 per ton, while U.S. copper futures gained 1.4% to $5.63 per pound.
