Gold (XAU/USD) posted a strong rally at the end of the day to an all-time high above $4,500 despite strong profit-taking signals during the Christmas holiday. Strong market volatility has yet to derail bullion’s record-setting streak throughout the week.
At 9.30am, gold was at $4,512, up 0.74% since it opened early Friday in Asian trading.
The extraordinary rise in gold prices this year has been impressive, up more than 70% since the start of the year, putting gold on track for its best annual performance since 1979.
The strong demand for this safe-haven asset is driven by ongoing geopolitical risks and economic uncertainty, as well as strong institutional investment flows.
Another key factor behind gold’s rise is the broader weakness of the US dollar (USD), influenced by US President Donald Trump’s protectionist trade rhetoric and loose monetary policy by the Federal Reserve (Fed).
The Fed has cut interest rates by a cumulative 75 basis points (bps) in 2025. The market is also expecting two more rate cuts next year. This environment continues to support demand for precious metals as low interest rates reduce the opportunity cost of holding non-yielding assets such as gold.
Going forward, gold is expected to consolidate in the near term due to the absence of new market triggers and profit-taking towards the end of the year which may depress prices slightly.
However, the long-term uptrend remains strong, suggesting that the gold rally is expected to continue into 2026.
