Rate Cut Bets, Venezuela Tensions Drive Gold and Silver Higher

 

Rate Cut Bets, Venezuela Tensions Drive Gold and Silver Higher

(Bullion News Network) – Precious metals opened the week of Christmas strong. Both gold and silver logged fresh all-time highs, and platinum hit its highest price in over a decade. The spot price of gold added more than $105 per troy ounce, soaring to an all-time high of more than $4,445 per troy ounce. Silver outpaced gold’s performance again, with the precious metal adding approximately $1.94/ozt to set a new all-time high of over $69.15 per troy ounce. The price action favored silver slightly, driving the gold-silver ratio lower by 0.12 to 64.42:1. Platinum logged one of its largest daily gains of 2025, adding approximately $150 per troy ounce and driving the metal to its highest price in over a decade, $2,130.40/ozt. Palladium added approximately $57 per troy ounce, expanding the gap between the two platinum-group metals to more than $325 per troy ounce.

Why are precious metal prices on the rise? The spot prices of gold, silver, and platinum increased throughout December, primarily due to a combination of interest rate cut speculation, rising tensions between the United States and Venezuela, and concerns about the U.S. economy.

The Federal Reserve voted to cut interest rates by 25 basis points on Dec. 12, the third rate cut of 2025. Safe haven assets like gold and silver tend to gain value when interest rates decrease, since cutting rates is often considered an inflationary action by central banks, and safe haven assets generally thrive in high-inflation environments. The December FOMC meeting was a contentious one, with the committee noting three major dissents for the first time since September of 2019. Heading into 2026, it is unclear whether the Federal Reserve will continue to slash interest rates. CME FedWatch opened the week with a projected probability of 19.9% that the FOMC will vote to cut rates when it meets in January of 2026. This projection is down from 22.1% last Friday and 24.4% on Dec. 15.

Also impacting precious metal prices are rising tensions between the United States and Venezuela. The U.S. conducted numerous strikes on ships off the coast of Venezuela; the Trump administration contends that the boats were carrying narcotics. Last week, U.S. President Donald Trump announced a full embargo of oil tankers, one of the Maduro regime’s main sources of national revenue. On Sunday, an anonymous source in the U.S. military revealed that the Coast Guard pursuit of a third Venezuelan oil tanker reportedly flying a false flag in an effort to avoid the sanctions. Safe haven assets, especially gold, often see a surge in demand during periods of rising tensions or armed conflict. In 2024 and 2025, major escalations between Israel and Iran drove gold and silver prices higher. Rising tensions between the U.S. and Venezuela, one of the world’s largest producers of crude oil, may be pushing investors toward conflict-resistant assets like gold and silver.

The soaring precious metal prices also come at a time when state of the U.S. economy is unclear. The Federal Reserve cut interest rates in September for the first time of 2025 after a string of troubling U.S. employment reports. The November jobs report showed a slowing hiring market, as well as an increase in the unemployment rate to 4.6%, its highest percentage since September 2021. Consumer prices have risen by 2.7% since last December. During a press conference after December’s FOMC meeting, Federal Reserve Chair Jerome Powell told reporters that the committee is dealing with a “challenging” situation as it attempts to balance rising prices with a cooling labor economy.

I could make a case for either side. […] But, in this situation, you have competing [signals]. If you looked at — if you look through the SEP, you’ll see that a very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation. So what do you do? You’ve got one tool. You can’t do two things at once. […]  It’s a very challenging situation.

The interest rate outlook is unclear heading into 2026. Following three consecutive rate cuts, the FOMC could be waiting to see how consumer prices and employment numbers respond before deciding to adjust its projections. Beth Hammack, President of the Federal Reserve Bank of Cleveland, believes that the Federal Reserve should wait several months before deciding to adjust rates again. Hammock will be a voting member of the Federal Open Market Committee (FOMC) in 2026. Hammack told the Wall Street Journal in a podcast that the FOMC is in a suitable position to wait for more inflation data before making a move on rates.

[The FOMC] can stay here for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially.

Gold and silver are set to close Friday at all-time highs. Gold cruised to just under $4,450 per troy ounce, while silver extended its gains into the afternoon to cross $69.15 per troy ounce. The price action drove the gold-silver ratio .24 lower to 64.30. Platinum closed the first day of this shortened trading week up more than $154 at its highest price in over a decade. Later this week, traders will be able to review U.S. GDP data, the December consumer confidence report, and initial jobless claims for the week of Dec. 20.