Gold remained steady on Wednesday, with the gold set on track for its strongest annual gain in over four decades. Spot gold was trading at $4,345.75 per ounce after reaching a record high of $4,549.71 on Friday.
US gold futures for February delivery dropped 0.5% to $4,365 per ounce. Despite recent profit booking, bullion has surged 66% in 2025, marking its largest yearly gain since 1979. Geopolitical tensions, including the Iranian revolution then, were comparable catalysts for gold’s past rallies.
The gold set rally this year has been supported by interest rate cuts, expectations of further easing by the US Federal Reserve, geopolitical conflicts, and strong demand from central banks. Exchange-traded fund holdings have also contributed to rising prices.
Analysts noted that the recent drop in precious metals was due to technical factors and thin trading. Ilya Spivak, head of global macro at Tastylive, said, “CME announced an increase in margins on metals futures, which caused a painful adjustment. Markets are thin with the holidays.”
The US dollar strengthened to a one-week high, making gold more expensive for holders of other currencies. Minutes from the Fed’s December meeting suggested that policymakers debated rate cuts carefully, though markets expect two reductions in 2026. Low interest rates typically benefit non-yielding assets like gold.
Spivak added, “Maybe towards the end of the first quarter of 2026, we could see gold test $5,000. The catalysts driving gold this year have become self-sustaining.”
Meanwhile, other precious metals saw sharp declines. Spot silver fell 4.5% to $73.06 per ounce, platinum dropped 6.1% to $2,065.80 per ounce, and palladium fell 7.1% to $1,496.75 per ounce. Despite the dips, these metals are all set for remarkable annual gains.
With the gold set performance, investors are closely watching trends into 2026, signaling continued interest in bullion as a hedge against economic and geopolitical uncertainty.
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