Precious metals are "out of control"! Gold and silver hit record highs. How should investors respond?

On Monday during Asian market hours, spot gold and silver jointly staged a “double kill” rally——the gold price suddenly surged by $33 to around $4,372 per ounce, while silver broke through its historical high, with a daily increase of 1.3%, trading at $68.05 per ounce. What exactly is hidden behind this big surge?

Why did precious metals suddenly accelerate?

Market participants point out that this round of rally is due to the resonance of three overlapping factors. First, the Federal Reserve’s future policy expectations have subtly changed—affected by mixed economic data, traders are reassessing the pace of rate cuts, generally expecting two rate cuts in 2026, which is undoubtedly a major positive for non-yielding assets like gold and silver. The loose liquidity environment has significantly increased the attractiveness of safe-haven assets.

Second, geopolitical tensions have escalated again. The US has intensified sanctions on Venezuela’s oil exports, and simultaneously, Ukraine has targeted Russian “shadow fleet” oil tankers in the Mediterranean for the first time. These events further reinforce global market concerns over risk assets, leading to a massive influx of funds into traditional safe-haven instruments.

Third, physical metal supplies are showing signs of tightness. The silver market is especially obvious—after the “short squeeze” in October, speculative funds continue to pour in without easing. Shanghai silver futures trading volume this month has approached levels seen during the supply tightness two months ago, further pushing up silver prices due to supply pressure.

How much room is left from the all-time high?

Data shows that spot gold is now close to the October record high of $4,381 per ounce, only about $9 away. Once this key resistance level is effectively broken, it will mark gold’s official entry into a new upward phase.

Looking further ahead, Goldman Sachs analysts recently released a report predicting that gold will continue to strengthen next year, with a target price of $4,900 per ounce under the baseline scenario, and upside potential still possible. Notably, the analysts remind that ETF investors and central banks are competing for limited physical gold supplies, and this structural tension could further support gold prices.

The 2024 finale: a legendary end for precious metals

This year’s rally has already set a record. Gold and silver are both expected to record their strongest annual gains since 1979—silver has more than doubled since the beginning of the year, while gold has increased by about two-thirds.

The main forces behind this surge come from three directions: continued central bank purchases of physical gold, forming a solid “official buying” foundation; continuous inflows into gold-backed ETFs supported by physical metals, with Bloomberg data showing five consecutive weeks of net inflows; and according to the World Gold Council, apart from May, total holdings of precious metal ETFs have increased month by month this year. Simultaneously, silver has also benefited from surging demand in recent weeks, as well as liquidity issues and price mismatches in major trading centers.

Technical guidance: where to look next?

From a chart perspective, FXStreet technical analysts indicate that gold needs to effectively break above the $4,381 all-time high to continue its upward momentum, opening up the possibility of reaching $4,400 and even $4,450–$4,500.

Conversely, if the gold price falls below the psychological level of $4,300, traders should be alert to further pullbacks. Recent support levels are sequentially the high of December 11 at $4,285, then $4,250, and the whole number of $4,200.

As of 09:02 Beijing time, spot gold is quoted at $4,372.40 per ounce, and the linked movements of silver and gold are still unfolding. For investors, the key is to understand the driving logic behind these movements—whether it’s macro policy shifts, geopolitical risks, or physical supply tightness—all point to the same direction: the safe-haven attributes and scarcity pricing of precious metals are being reevaluated by the market.