On Monday, December 22, gold and silver prices reached record highs: rising geopolitical tensions coincided with expectations of US interest-rate cuts, once again intensifying inflows into precious metals.
In early Monday trading, gold rose by 1.9 percent, reaching $4,420 per troy ounce. Silver also set a record, gaining as much as 3.4 percent and climbing to $69.44 an ounce.
Analysts say one of the drivers behind the rally was the tightening of the US blockade on Venezuelan oil, pushing investors toward so-called “safe-haven” assets. According to reports, US President Donald Trump is weighing the possibility of military action on Venezuelan soil, increasing pressure on the autocratic President Nicolás Maduro to step down.
“It is a reminder that geopolitical risks and debasement concerns share the same hedging instrument—gold,” said Arun Sai, senior multi-asset strategist at Pictet Asset Management. By “debasement,” he refers to the idea that precious metals, including gold, serve as a hedge against the erosion of the purchasing power of traditional currencies such as the dollar.
“Investors see gold as a way to insure against these risks while remaining invested,” Sai added, explaining why geopolitical uncertainty is currently being expressed through commodity markets rather than equities or bonds.