Both gold and silver prices soared on Monday to new record highs as US rate cuts, coupled with safe-haven demand, buoyed sentiments.
The February gold contract on COMEX hit a fresh record high of $4,452.85 per ounce earlier on Monday.
The March silver contract also hit a new high of $69.515 per ounce.
At the time of writing, the gold contract was at $4,443.40 per ounce, up 1.3%, while silver was up 2.2% at $68.972 an ounce.
Gold has entered a phase of price discovery, decisively moving beyond its former all-time high of approximately $4,381.
It has officially transitioned out of its previous consolidation phase and is maintaining trading levels above that significant mark.
Year of the bullion
“This move was not impulsive or news-driven; instead, it unfolded through clean expansion, brief consolidation, and renewed continuation, signalling institutional participation rather than speculative chasing,” Jasper Osita, market analyst at ACY Securities, said in a FXstreet report.
This year, gold has seen its most significant annual increase since 1979, surging by almost 68%.
This remarkable rise has been driven by substantial central bank purchases, increased safe-haven demand, and lower interest rates.
Strong investment demand, combined with growing industrial needs and an ongoing supply deficit, has fueled a remarkable 138% rise in silver prices year-to-date.
Federal Reserve Governor Stephen Miran on Friday repeated his position that the US central bank ought to reduce interest rates.
He reasons that lower rates are necessary to counteract potential risks to the job market, given that inflation has already decreased.
Gold, which serves as a hedge against inflation and a safe haven during instability, typically benefits from a lower interest rate environment because it is a non-yielding asset.
The US dollar, which inched lower and is set for its steepest annual decline since 2017, simultaneously made gold more affordable for international buyers.
Gold firmly supported
Several forces continue to underpin gold’s resilience. These include persistent hedging demand amid uncertainty around global growth, debt, and long-term monetary stability, Osita said.
There is also reduced sensitivity to the dollar fluctuations, indicating that demand is driven by allocation rather than currency mechanics alone, according to Osista.
Furthermore, institutional accumulation is evident through an orderly structure and a lack of aggressive sell-offs.
Finally, technically favourable conditions exist as former resistance transitions into support, he said.
Gold is no longer reacting emotionally to headlines — it is absorbing volatility, which typically precedes trend continuation.
To continue the upward movement, the bulls need to definitively close above the prior peak of 4,381 per ounce.
Successfully achieving this would open the path toward the psychological barrier of 4,500, with further momentum potentially driving the price toward the provisional resistance line, which originates from April 2025, at 4,700, according to Christina Parthenidou, investment analyst at XM.
The 161.8% Fibonacci retracement level of the most recent decline is also nearby.
Surpassing this level could pave the way for a move toward the 4,900 mark, she further said.
If upside momentum is stalled, initial support is anticipated between the 4,250-4,290 area and the 20-day Simple Moving Average (SMA), according to Parthenidou.
A deeper pullback could see the 50-day SMA within the 4,130-4,150 range.
Summing up, the precious metal might be poised to enjoy a Santa Claus rally as it enters uncharted territory, with buyers likely awaiting a convincing move above 4,380 to drive the price higher.
Silver outlook
The current mood in the silver market remains firmly in favour of bullish traders and suggests a path of least resistance.
With the price comfortably positioned above the 100-hour SMA at $65.57, the near-term trend maintains a strong upward bias for silver, according to a FXstreet report.
The Moving Average Convergence Divergence (MACD) is currently rising in positive territory, sitting at 0.19.
This suggests the bullish momentum is continuing to strengthen.
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