The rally has been fueled by growing conviction among traders that the US Federal Reserve will move toward lower interest rates, with markets now pricing in two rate cuts in 2026. A series of recent economic indicators has reinforced those expectations, while US President Donald Trump has publicly pressed for easier monetary policy. Lower interest rates typically benefit gold and other precious metals, as they reduce the opportunity cost of holding assets that do not generate yield.
At the same time, rising geopolitical risks have amplified demand for bullion as a store of value. In recent weeks, the United States has intensified an oil blockade targeting Venezuela, increasing pressure on the government of President Nicolás Maduro. Adding to global unease, Ukraine carried out an attack on an oil tanker linked to Russia’s so-called shadow fleet in the Mediterranean Sea, marking the first such strike in that region. These developments have heightened concerns over energy supply disruptions and broader instability, strengthening the appeal of gold and silver as defensive investments.
Both precious metals are now on track for their strongest annual gains since 1979. Gold prices have climbed by roughly two-thirds this year, supported by sustained purchases from central banks and strong inflows into bullion-backed exchange-traded funds. Investors have also reacted to President Trump’s aggressive efforts to reshape global trade and his repeated criticisms of the Federal Reserve, moves that earlier in the year raised questions about the central bank’s independence and added momentum to the rally.
As financial markets weigh the prospect of prolonged geopolitical uncertainty alongside a potential shift toward easier monetary conditions, gold’s record-breaking run highlights its enduring role as a hedge against risk. The latest surge not only reflects immediate market anxieties but also signals deeper concerns about global stability and the future direction of economic policy.
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