18 December 2025
Gold Approaches Record as Traders Watch US Data and Venezuela
1. FACTS
What has just happened
Gold has risen again and is trading close to record levels, near 4,350 dollars an ounce. This follows a modest pullback in the previous session that ended a five day winning streak.
The all time high stands just above 4,381 dollars an ounce, set in October. Gold is now up more than 60 percent this year and is on track for its strongest annual performance since 1979.
Silver has climbed to a fresh peak above 66 dollars an ounce. Platinum has surged to its highest level since 2008.
Investors are focused on imminent US inflation data and upcoming public remarks by senior Federal Reserve officials. The Federal Reserve has delivered three consecutive rate cuts, which support assets that do not pay interest. Markets currently assign less than a 25 percent probability to another cut in January.
Gold has also been supported by geopolitical escalation in Venezuela. President Donald Trump ordered a blockade of sanctioned oil tankers and is pressuring Nicolas Maduro amid a military build up and the threat of land strikes.
Platinum strength has been linked to a European Union proposal to ease emissions rules for new cars, extending the expected life of combustion engines. Platinum and palladium are used in catalytic converters.
Source: Bloomberg Markets
https://www.bloomberg.com/markets/commodities
2. FORCES
The pressures pushing prices higher
2.1 Inflation And Monetary Policy
Inflation data shapes expectations for future interest rates. Lower expected rates reduce the opportunity cost of holding gold and silver.
Even before the data is released, the tone of Federal Reserve speakers can move markets.
2.2 Capital Rotation Away From Bonds And Fiat
Investors are continuing to reduce exposure to government debt and major currencies. Central bank buying of gold adds a steady source of demand that is less sensitive to daily market noise.
2.3 Geopolitical Risk Premium
Escalation around Venezuela raises the probability of energy disruption and wider regional instability. Such events increase demand for assets viewed as monetary insurance.
2.4 Growth And Equity Valuation Risk
A slowing global economy supports defensive positioning. Elevated equity valuations encourage portfolio diversification into non correlated assets.
2.5 European Auto Policy Shifts
Easing emissions rules would extend the use of combustion engines. That increases expected demand for platinum group metals used in exhaust treatment systems.
3. FRICTIONS
What can slow or interrupt the trend
3.1 Overextension Risk
Gold has risen very rapidly this year. Fast moves increase the risk of consolidation as investors take profits.
3.2 Uncertainty About Further Rate Cuts
Despite recent easing, markets are not convinced that further cuts are imminent. This limits near term upside unless inflation data surprises.
3.3 Geopolitics Is Unstable By Nature
Military and sanctions risks can escalate or fade suddenly. Markets can overshoot on headlines, then correct.
3.4 Policy Dependence In Platinum
Auto regulation remains political. Policy can change again, making platinum more volatile than purely monetary metals.
4. FUTURES
Plausible paths from here
4.1 Base Case
A period of consolidation is likely after such a strong year. A steadier upward trend can follow if rate expectations remain supportive and risk premiums persist.
Forecasts cited by market analysts cluster around 4,500 dollars an ounce in 2026.
4.2 Bull Case
If inflation remains persistent while growth slows, gold can benefit from both fear and easing expectations. BNP Paribas has suggested a credible pathway toward 5,000 dollars sometime next year if multiple supportive forces align.
4.3 Bear Case
A renewed rise in real yields or a stronger dollar would pressure precious metals. A strong equity rally combined with higher yields could reduce hedging demand.
4.4 Silver And Platinum
Silver behaves as a hybrid asset, part monetary metal and part industrial metal. It tends to outperform gold when liquidity improves and growth fears ease.
Platinum remains highly sensitive to regulatory signals and industrial demand expectations.
5. CAUSE AND EFFECT LINKAGES
Why gold and silver prices move
Gold and silver prices are shaped by two broad categories of drivers. Protection related factors and performance related factors. The balance between them changes across cycles.
5.1 Protection Related Factors
These relate to capital preservation.
• Inflation risk eroding the real value of cash and bonds
• Currency debasement fears driven by deficits and monetary expansion
• Geopolitical conflict and sanctions risk
• Sovereign debt sustainability concerns
• Declining trust in institutional competence
Gold is the clearest expression of protection demand.
5.2 Performance Related Factors
These relate to opportunity cost and relative returns.
• Real interest rates and expectations of rate cuts
• Strength or weakness of the US dollar
• Relative performance versus equities and bonds
• Momentum and positioning flows
• Industrial demand, which matters more for silver
Silver often outperforms gold when growth expectations stabilise.
6. OTHER NEWS FACTORS THAT MAY HAVE BEEN MISSED
Context beyond the last one or two days
Several slower moving but news relevant factors continue to shape precious metal prices.
• Ongoing central bank gold purchases by emerging market states
• Continued efforts to reduce reliance on the US dollar in trade settlement
• Weak demand for long dated sovereign bonds
• Rising fiscal stress in advanced economies
• Strong inflows into physically backed precious metal ETFs
• Supply constraints in silver mining due to declining grades and underinvestment
These factors form the background conditions that make short term news repeatedly reinforce the same direction.
7. GLOSSARY OF KEY TERMS
Precious metals
Gold, silver, platinum and palladium are metallic chemical elements valued for their resistance to corrosion, electrical behaviour, catalytic properties, and their long role in monetary history.
Periodic table of elements
The periodic table arranges elements by atomic number and electron configuration. Precious metals appear where they do because of their atomic structure. Scarcity is an economic concept linked to supply and demand, not a principle of chemical classification.
Bullion
Physical precious metal held as bars or coins.
Monetary easing
Central bank action that lowers interest rates or increases liquidity.
Safe haven
An asset perceived to retain value during periods of stress.
Real yields
Interest rates adjusted for inflation expectations.
Parabolic surge
A very rapid price rise that often leads to consolidation.
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