BY COMFORT OGBONNA
Gold prices climbed on Tuesday, recovering part of the sharp losses seen in the previous session, as thin year-end trading conditions amplified market swings and renewed optimism about the long-term outlook for precious metals.
With liquidity reduced during the holiday period, even modest shifts in sentiment have been triggering outsized price moves, leaving traders focused on broader fundamentals that many believe could push gold to fresh highs in 2026.
Spot gold rose 0.7% to $4,361.71 per ounce by 0709 GMT, rebounding after sliding to its lowest level since December 17 a day earlier. Monday’s decline marked gold’s steepest daily percentage loss since October 21, following profit-taking after the metal surged to a record peak of $4,549.71 on Friday. U.S. gold futures for February delivery also advanced, gaining 0.8% to trade at $4,377.20 an ounce.
Market analysts pointed to the unusually light trading environment as a key factor behind the heightened volatility. According to Kyle Rodda, senior analyst at Capital.com, the scale of the selloff at the start of the week underscored how sensitive prices have become in thin markets, where fewer participants can magnify price movements. Technical indicators reflected this pullback, with the relative strength indexes for both gold and silver retreating from overbought territory on Monday, suggesting some cooling after an extended rally.
Despite the recent turbulence, gold’s broader performance this year remains exceptional. Bullion has surged around 66% so far in 2025, driven by a combination of macroeconomic and geopolitical factors.
Expectations of interest rate cuts, ongoing geopolitical tensions, strong buying by central banks, and rising inflows into exchange-traded funds have all underpinned demand. Traders are currently pricing in at least two U.S. rate cuts next year, a scenario that tends to support non-yielding assets like gold by reducing the opportunity cost of holding them.
Silver mirrored gold’s rebound with even stronger gains. Spot silver jumped 3.1% to $74.49 per ounce, recovering after suffering its biggest daily loss since August 11, 2020, in the previous session. That drop followed a surge to an all-time high of $83.62. On a year-to-date basis, silver has dramatically outperformed gold, rising about 158%, supported by its inclusion on the U.S. critical minerals list, persistent supply constraints, low inventories, and growing industrial as well as investment demand.
Looking ahead, analysts remain constructive on the longer-term outlook for both metals. Kelvin Wong, senior market analyst at OANDA, said he expects the rally to continue, projecting price targets over the next six months of $5,010 per ounce for gold and $90.90 for silver, as structural demand and supportive monetary conditions persist.
Other precious metals also showed mixed moves after recent sharp swings. Spot platinum climbed 1.8% to $2,146.81 per ounce, bouncing back after recording its largest one-day drop on record on Monday, shortly after hitting an all-time high of $2,478.50. Palladium, however, slipped 0.7% to $1,605.72 per ounce, extending weakness after plunging 16% in the previous session, highlighting the uneven recovery across the precious metals complex as markets head into the final days of the year.
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