Gold is on track for its best performance since 1979 and jumps to $4,365
Precious metal prices rebounded in global markets today, recovering from sharp losses incurred in the previous session, driven by renewed investor concerns about geopolitical tensions and economic uncertainty. This shift in risk appetite propelled gold prices sharply higher, putting the precious metal on track for its best annual performance since 1979 – a historic first reflecting the magnitude of the transformations in financial markets.
Gold's performance and recovery from profit-taking
In spot trading, gold rose 0.8% to $4,365.86 an ounce . This gain comes after the market experienced its biggest daily percentage loss since October 21, as heavy profit-taking by traders pushed prices back from their record high of $4,549.71 reached last Friday. Meanwhile, U.S. gold futures also rose 0.8% to $4,380.10 an ounce.
Await the Fed minutes and the impact of interest rates
Investors and economists around the world are focused today (Tuesday) on the Federal Reserve (the US central bank), awaiting the release of the minutes from its December meeting. This document is of paramount importance as it may provide clear indications of the future direction of monetary policy. Current market expectations point to the possibility of two interest rate cuts next year. It is a well-established economic principle that lower interest rates reduce the opportunity cost of holding non-yielding assets such as gold, thereby enhancing its investment appeal and putting downward pressure on the US dollar.
Silver excels and enters the list of critical metals
Gold wasn't the only winner; silver also performed exceptionally well, rising 4.6% in spot trading to $75.523 an ounce . This followed sharp fluctuations that saw it reach an all-time high of $83.62 before retreating. Remarkably, silver has achieved a staggering 161% gain since the beginning of the year, outperforming gold.
This significant advantage of silver is attributed to its recent inclusion on the list of "critical metals" in the United States, in addition to a shortage of global supply coinciding with rising industrial demand, especially in the clean energy and electronics sectors, alongside investment demand.
Platinum and palladium movements
In the rest of the precious metals complex, platinum rose 4.5% in spot trading to $2,203.07 an ounce, attempting to recover from its biggest one-day drop ever recorded yesterday after hitting a record high of $2,478.50. Palladium also rebounded, gaining 2% to reach $1,648.75 an ounce, recovering from a sharp 16% decline in Monday's session.
Historical context: Why 1979?
Comparing current performance to 1979 is highly significant. Back then, the world experienced massive inflation and geopolitical crises (including the second oil crisis), propelling gold to historic gains as a safe haven. A repeat of this scenario today suggests that global markets are pricing in prolonged economic and political uncertainty, restoring gold's luster as the primary hedge against wealth erosion.
