Gold, silver, and platinum prices hit new all-time highs on December 26 amid fresh geopolitical tensions and increasing expectations of an interest rate cut by the US Federal Reserve (US Fed).
On the Multi Commodity Exchange (MCX), February Gold futures rallied as much as 0.97 per cent to its lifetime high at Rs 1,39,433 per 10 grams. Gold prices on MCX are up 81.67 per cent so far this year.
In the international markets, on Comex, February Gold futures surged 1.30 per cent to hit a record high of $4,561.60 per troy ounce. One troy ounce equals 31.10 grams.
MCX March Silver futures jumped more than 4 per cent to hit its record high at Rs 2,33,183 per kg. Silver prices on MCX have rallied 167.31 per cent year-to-date (YTD).
On Comex, February Silver futures zoomed 5.31 per cent to a record high at $75.49 per troy ounce.
January Platinum futures on Comex skyrocketed as much as 10 per cent to hit an all-time high of $2,476.20 per troy ounce. Platinum does not trade on MCX.
Why Precious Metals Are Rising
The following are the reasons behind the rally in Gold, Silver, and Platinum’s prices:
Geopolitical Tensions
The United States is tightening enforcement of what it calls a “quarantine” on Venezuelan oil exports for the next two months, as the US looks to further squeeze revenues flowing to President Nicolás Maduro’s government. The White House has directed US forces to closely monitor and intercept crude shipments.
In a separate development, the US President Donald Trump on the eve of Christmas announced that the Washington carried out air strikes on ISIS militants in northwest Nigeria, following a spate of attacks on local "Christians". Trump said the strikes targeted militants responsible for violence against civilians, including Christians.
Typically, in times of geopolitical unrest, investors turn to safe-haven metals as a hedge against uncertainty and market volatility.
“The rally reflects surging safe-haven demand triggered by escalating geopolitical risks in Venezuela and Nigeria. US pressure on Nicolás Maduro’s regime, including vessel restrictions and fears of potential military action, has amplified year-end gains,” said Kaynat Chainwala, associate vice president of commodity research at Kotak Securities.
US Fed Rate Cut Expectations
The Chicago Mercantile Exchange’s (CME) FedWatch Tool suggests at least two rate cuts by the US Fed next year. Amid a low-interest-rate scenario, non-yielding assets like Gold, Silver and Platinum tend to become more attractive. This is because US Fed rate cuts and expectations of further easing reduces holding costs, explains Chainwala.
Traders are pricing in a 15.50 per cent chance for a 25 basis point (bps) rate cut during US Fed's January 2026 meeting. The probability of a rate cut, however, has reduced from 22.10 per cent on December 23. Majority traders are betting that the US Fed will keep rates unchanged, with a probability of 84.50 per cent.
For the March meeting, the FedWatch Tool suggests a 41.20 per cent chance of a 25 bps rate cut, and 5.80 per cent probability of a cumulative 50 bps rate cut. 53 per cent traders think the US Fed will hold rates.
This is a developing story...
