Gold set 50th record for the year amid demand for defensive assets

Gold set the 50th daily record since the beginning of 2025 and came close to $4500 per troy ounce. Agitated interest in the asset is fueled by both geopolitical risks and the actions of retail investors, who massively invest in "gold" ETFs. Analysts forecast the precious metal to grow to $5000, although they warn about possible volatility during the New Year period.

The spot price of gold jumped by 1.2% to a record $4497.74 per ounce in morning trading on December 23. U.S.-traded February futures for the precious metal rose 1.4% to $4530.8. Gold has risen 70% since January and is on track for its best annual performance since 1979, when prices soared due to the oil crisis and the Islamic Revolution in Iran.

The attractiveness of gold as a non-interest earning asset increased last week due to increased hopes for lower interest rates. Interest in the precious metal as a protective asset increased against the background of rapid escalation of the US conflict with Venezuela - the country with the world's largest oil reserves.

The rally is supported by large-scale purchases by central banks and the inflow of funds into gold-backed securities of investment exchange-traded funds (ETFs): according to the World Gold Council, the total reserves in such ETFs have grown every month this year, except Ma, Bloomberg writes. The largest ETF on the precious metals market SPDR Gold Trust on December 23 increased reserves by 12 tons at once, which has not been done since October, the agency notes.

The inflow of funds into "gold" ETFs in recent months was provided not by institutional, but mainly by retail investors, which increases market volatility, said Apoorva Javadekar, chief economist at Muthoot Fincorp. At the end of the year, the number of active buyers and sellers in the market traditionally decreases, so the risk of sharp fluctuations in quotations increases, warned Naga analyst Frank Walbaum. Michael Brown from Pepperstone allowed market consolidation during the holidays as liquidity decreases (a temporary pause in price growth), but expects a resumption of the rally after the return of trade volumes, writes Reuters. The expert predicts a rise in the price of gold to $5000 next year, and the long-term target for silver calls the mark of $75.

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