Gold broke through $4400 per ounce for the first time in history. What is driving the market?

Gold on December 22 for the first time in history overcame the level of $4400 per troy ounce amid increased expectations of further interest rate cuts in the U.S. and escalating geopolitical tensions. Silver joined the rally and also reached an all-time high.

The spot gold price at trading on Monday morning, December 22, broke through the $4400 per ounce mark and reached an all-time high of $4400.29. Spot silver rose 3.3% to an all-time high of $69.44. U.S. gold futures for delivery in February rose 1% to $4430 an ounce.

Gold as a traditional protective asset is supported by the strengthening geopolitical and trade tensions, stable purchases by central banks and expectations of lower interest rates in 2026. The weakening dollar has provided additional support, making the metal cheaper for foreign buyers, Reuters writes.

Since December usually brings positive returns for gold and silver, the seasonal factor plays into their favor, StoneX senior analyst Matt Simpson noted. On the other hand, gold is already up 4% this month, and buyers should be cautious as year-end trading activity is expected to decline and the likelihood of profit taking is on the rise, Simpson warned.

"Today's rally is largely due to early positioning on expectations of a Fed rate cut, the effect of which is amplified by low year-end liquidity," according to Pepperstone strategist Dilyn Wu. According to her, weak job growth and lower-than-expected US inflation for November have bolstered the case for further rate cuts.

Since the beginning of 2025, gold has risen 67%, crossing the $3000 and $4000 per ounce thresholds. Silver has soared 2.4 times in price since January. Both precious metals are on track for their strongest annual gains since 1979, when prices soared due to the oil crisis and the Islamic Revolution in Iran.

After macroeconomic data released last week, traders are betting that the U.S. Federal Reserve will lower interest rates twice in 2026, Bloomberg reports. Rate cuts usually favorably affect the prices of precious metals, which do not generate interest income.

The attractiveness of gold and silver as protective assets has increased against the backdrop of escalating geopolitical tensions in recent days. The U.S. strengthened its oil blockade of Venezuela, while Ukraine for the first time attacked a tanker in the Mediterranean Sea, which it claims is part of Russia's "shadow fleet" - such vessels carry unsanctioned Russian oil.

This article was AI-translated and verified by a human editor