Gold Edges Higher Near Record Levels as Geopolitical Tensions and Rate-Cut Bets Fuel Demand

BY COMFORT OGBONNA

Gold prices edged higher on Tuesday, hovering near a one-week high and closing in on record territory, as investors sought safety amid heightened geopolitical tensions and growing expectations of U.S. interest rate cuts. Demand for bullion has been underpinned by uncertainty surrounding recent events in Venezuela as well as signs of weakening momentum in the U.S. economy.

Spot gold rose 0.3% to $4,461.09 per ounce by 1135 GMT, building on a nearly 3% surge in the previous session. Prices remain not far from the all-time high of $4,549.71 reached on December 26. Gold ended last year with a remarkable gain of 64%, marking its strongest annual performance since 1979, as investors increasingly turned to the metal to hedge against economic and political risks.

U.S. gold futures for February delivery also advanced 0.3% to $4,462.60, reflecting continued bullish sentiment across the precious metals market. Analysts say gold’s resilience highlights its role as a safe-haven asset at a time when confidence in the global outlook remains fragile.

Market participants have been closely watching developments in Venezuela after the U.S. capture of President Nicolás Maduro over the weekend. Maduro pleaded not guilty on Monday in a New York court to charges including narco-terrorism and possession of prohibited weapons, adding to geopolitical uncertainty that has driven investors toward defensive assets. According to ActivTrades analyst Ricardo Evangelista, safe-haven demand has intensified due to these developments, while expectations of looser U.S. monetary policy have provided additional support.

Economic data in the United States has also strengthened the case for gold. U.S. manufacturing activity contracted more than expected in December, falling to a 14-month low, reinforcing concerns that the economy may be losing momentum. Comments from Minneapolis Federal Reserve President Neel Kashkari further added to dovish expectations, after he warned that the unemployment rate could rise more sharply than anticipated, increasing the likelihood of interest rate cuts.

Investors are now pricing in two U.S. rate cuts this year and are turning their attention to December’s nonfarm payrolls report due on Friday. The data is expected to play a key role in shaping expectations for the Federal Reserve’s next moves. Lower interest rates typically benefit non-yielding assets such as gold, particularly during periods of economic or geopolitical uncertainty.

Other precious metals also posted strong gains. Spot silver jumped 2.4% to $78.31 per ounce after touching an all-time high of $83.62 on December 29. Silver recorded its strongest annual performance in 2025, soaring 147%, supported by robust industrial demand and strong investor interest. Spot platinum climbed 2.3% to $2,323.15 per ounce, after hitting a record high of $2,478.50 last Monday, while palladium advanced 1.7% to $1,736.26 per ounce.

Overall, precious metals markets remain well supported as investors weigh persistent geopolitical risks against an increasingly dovish outlook for U.S. monetary policy, keeping gold and its peers firmly in focus.