Gold and silver reach record highs amid economic uncertainty

Precious metals benefit from safe-haven demand as investors anticipate further US interest rate cuts

Gold has climbed nearly 71 per cent this year, while silver has leapt 145 per cent. Reuters

Gold and silver rose to record highs on Friday, outshining stock markets as the safe-haven appeal of the precious metals strengthened amid economic concerns and the potential for further US Federal Reserve interest rate cuts.

Gold, widely considered as a hedge against inflation and having breached several key levels this year, climbed to $4,549 per ounce before settling at 4,534.16, up 1.22 per cent - putting gains this year at nearly 71 per cent.

Silver, meanwhile, increased to a record $79.70 per ounce, approaching the $80 mark after it breached $75 for the first time on higher industrial demand. It settled 10.21 per cent higher at $79.25, bringing its year-to-date gains to 145 per cent.

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"We can say it: it’s been a golden year. Gold has renewed record highs more than 50 times ... while silver’s gains have been even more impressive," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

With more countries buying gold to build reserves, "record prices ... have also intensified strategic accumulation and rebalancing across the global financial system", said Alan Goldberg, lead data analyst at trading platform BestBrokers.

"This broad-based demand reflects ongoing concerns over geopolitical risks, inflationary pressures, and potential shifts in interest-rate policies, suggesting that gold will continue to serve as a key hedge in diversified portfolios," he said.

Both investors and central banks, which have increased their allocations to gold, are seeking diversification and stability, the World Gold Council said in its 2026 outlook.

"Taking cues from this year, 2026 will likely continue to surprise. If economic growth slows and interest rates fall further, gold could see moderate gains. In a more severe downturn marked by rising global risks, gold could perform strongly," the London-based WGC said.

It cautioned, however, that any successful outcome from policies set by the Trump administration would accelerate economic growth and reduce geopolitical risk, "leading to higher rates and a stronger US dollar, pushing gold lower".

On Wall Street, indices ended nearly flat on Friday in thin post-holiday trading but were still hovering below record levels.

Investors will now look for more clues going into next year, with a special focus on the US central bank, as observers price in at least two more interest rate cuts and, arguably more importantly, the stepping down of Fed chairman Jerome Powell, whose term ends in May.

Mr Powell's replacement, expected to be an ally of US President Donald Trump, may have major implications for Fed policy moving forward, especially as Mr Trump has continued to push for deeper and more frequent rate cuts.

The Dow Jones Industrial Average inched down 0.04 per cent, the S&P 500 declined 0.03 per cent, and the tech-heavy Nasdaq Composite shed 0.09 per cent.

Major stock markets in Europe were closed for the holiday.

Earlier in Asia, bourses also engaged in light trading, with Tokyo's Nikkei adding 0.7 per cent and the Shanghai Composite rising 0.1 per cent. Hong Kong's Hang Seng Index remained closed.

Oil, meanwhile, gave up gains and slid by more than 2 per cent, but still managed to record its first weekly gain in three weeks as investors digested supply glut concerns and looked ahead to a key meeting between the US and Ukraine that may broker a peace deal with Russia.

Brent, the benchmark for two-thirds of the world's oil, retreated 2.57 per cent to close at $60.64 a barrel. West Texas Intermediate, the gauge that tracks US crude, slipped 2.76 per cent to $56.74 per barrel.