Gold prices have surged 50% this year to touch a record level of $3965 (~Rs 120,000), and Silver has surged 65% this year to touch the level of $48.48 (~Rs 147,500) on safe-haven demand due to market uncertainty. 2025 has been the year of uncertainties- it started with political uncertainty, then tariff uncertainty, then geopolitical uncertainty, then rate cut uncertainty and now US shutdown uncertainty. All these uncertainties have supported bullion prices to rise phenomenally this year on safe-haven demand.
A weaker dollar, robust central bank purchases, rising demand for gold-backed Exchange-Traded Funds, and growing interest from retail investors looking to hedge against rising trade and geopolitical tensions are all contributing factors. The demand for gold-backed ETFs, futures, and associated financial instruments is being supported by robust safe-haven flows, which are being pushed by concerns about de-dollarisation around the world. All of the major long-term bullish factors for the metal are still in place, particularly the continued decline in the USD and the robust central bank allocation.
There is still uncertainty surrounding the U.S. economy and the possible magnitude of any GDP damage due to the ongoing government shutdown in the United States. If President Donald Trump determines that talks with congressional Democrats to end a partial government shutdown are completely failing, the Trump administration will begin mass layoffs of federal employees.
After fiscal conservative Sanae Takaichi was chosen to head the ruling party and take over as prime minister, the yen has suffered its biggest decline versus the US dollar in five months. Gold was able to profit from the weakening of the yen following the Japanese LDP elections, which has left investors with one fewer safe-haven asset to turn to capitalise.
After the Senate on Friday failed to move forward with competing plans to extend federal funding, the US partial shutdown was prolonged into this week. Investors are now forced to rely on alternative data that point to a weaker labour market because this has delayed important economic releases, such as the September non-farm payrolls report. Traders will be watching Federal Reserve officials’ comments this week for additional hints about the central bank’s policy stance, even in the absence of new data.
Gold Dec Futures has given a breakout above its previous week’s high of $3922 (~Rs 118,000); the next target is $4000 (~Rs 122,000). One needs to be cautious on the buy side, as this rally is very steep, and we could witness profit-booking anytime. If prices fall below $3850 (~Rs 117,500), then we could say prices have topped out and see further profit booking.
Silver Nov Futures has given a breakout above its previous week’s high of $48.32 (~Rs 147,000); the next target is $50 (~Rs 150,000). One needs to be cautious on the buy side, as this rally is very steep, and we could witness profit-booking anytime. If prices fall below $47 (~Rs 143,000), then we could say prices have topped out and see further profit booking.
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