Gold on track for best year in nearly half a century

By Ishaan Arora

Gold was steady early on Wednesday, remaining on track for its strongest annual gain in more than four decades, while other precious metals fell sharply as investors booked profits after a strong, record-setting rally.

Spot gold was steady at $4,345.75/oz at 4.04am GMT after hitting a record high of $4,549.71 on Friday. US gold futures for February delivery lost 0.5% to $4,365.0/oz.

Bullion has climbed 66% in 2025, marking its largest annual gain since 1979, when prices were driven higher by geopolitical factors, including the Iranian revolution.

Gold’s rally has been driven by interest rate cuts and bets of further easing by the US Federal Reserve, geopolitical conflicts, robust demand from central banks and rising holdings in exchange traded funds.

However, analysts said that recent declines in precious metals were linked to technical factors alongside thin trading.

“CME announced an increase in margins on metals futures, and that was a very painful adjustment for [precious metals on Monday]. It seems we have very thin markets here with the holidays,” Ilya Spivak, head of global macro at Tastylive, said.

The US dollar rose to a more than one-week high, making greenback-priced bullion more expensive for other currency holders.

Minutes from the Federal Reserve’s December meeting showed policymakers agreed to cut interest rates only after a deeply nuanced debate, though traders expect two more reductions in the year ahead.

Low interest rate environments typically support non-yielding assets such as gold.

“Maybe towards the end of the first [quarter of 2026], we could see [gold] test $5,000. Certainly, it seems like the sort of catalysts animating gold, especially over the course of the past year, have become self-sustaining,” Spivak said.

Spot silver fell 4.5% to $73.06/oz on Wednesday after hitting a new high of $83.62 on Monday. Silver has gained over 150% in the year to date and is set for its best year yet.

The metal broke multiple milestones in 2025, supported by its designation as a critical US mineral, supply constraints, low inventories, and rising industrial and investment demand.

Spot platinum shed 6.1% to $2,065.80/oz after rising to a lifetime high of $2,478.50 on Monday. It is up over 120% for the year, its strongest gain ever.

Palladium fell 7.1% to $1,496.75/oz and is set to close the year up 65%, its best performance in 15 years.