By Anushree Mukherjee
(Reuters) -Gold scored another record high on Wednesday, taking this year’s gains to 47% on mounting expectations for further cuts to U.S. interest rates, safe-haven demand and a weakening dollar.
Silver has followed suit and is up 63% this year, hovering just shy of its record high.
BULL RUN GATHERS PACE
Spot gold hit a record $3,895.09 an ounce and was last trading at $3,864.16 at 1520 GMT. Bullion, which offers no yield but attracts investors in times of geopolitical and economic uncertainty, registered a robust 27% gain last year.
“Investors are navigating everything from shifting Fed policy to global political developments, and gold is playing its traditional role as a store of value,” said Joseph Cavatoni, senior market strategist at the World Gold Council (WGC) trade association.
“What’s important now is that this safe-haven demand is layered on top of structural allocation trends — meaning gold isn’t just reacting to events, but also gaining traction as a core holding in portfolios.”
On the U.S. policy front, the Federal Reserve cut interest rates for the first time this year in September, with markets pricing in two more cuts in 2025.
Conflict in the Middle East and the Russian war in Ukraine have stoked market jitters and economic uncertainty, as have fears over the U.S. Federal Reserve’s independence under the influence of President Donald Trump.
Gold’s rally has also been underpinned by central bank buying, rising inflows into gold exchange-traded funds (ETFs), a weaker dollar and strong demand as a hedge against uncertainty.
“As long as uncertainty levels are high, ETF flows (into gold) should continue … I see gold prices passing through $4000/oz by the turn of the year,” said Michael Haigh, global head of commodities research at Societe Generale.
Global gold ETF demand has rebounded to 587.8 metric tons so far this year, recovering from a net outflow of 6.8 tonnes in 2024, the WGC says. [GOL/ETF]
SILVER FOLLOWS BULLISH TRACK
Silver climbed to $47.83 an ounce for its highest since May 2011. Its record high is the $49.51 peak hit in April 2011.
Silver’s rally is supported by the same macroeconomic factors driving gold as well as by strong industrial demand, a tight spot market and speculative momentum.
The gold-silver ratio stands around 82, its lowest since late October last year, signalling a relative strengthening of silver against gold.
“Silver is a bit of a catch-up trade as it has been underperforming gold for several quarters prior to mid-2025,” said Aakash Doshi, global head of gold strategy at State Street Investment Management.
Silver supply growth has lagged demand growth for the past few years and recent CME premiums to London spot prices have encouraged deliveries into the COMEX system, he added.
Industrial use accounts for nearly 60% of global demand for silver and the metal’s inclusion on a draft list of U.S. critical minerals has sparked speculation over potential tariffs, drawing close attention from the market.
CME silver stocks have jumped by more than 60% to 530.2 million ounces since the start of the year while the metal remains on track for a fifth straight annual supply deficit.
(Reporting by Anushree MukherjeeAdditional reporting by Ashitha Shivaprasad in BengaluruEditing by David Goodman)
