Gold is having an exceptional year in 2025, rising more than 60% since the start of the year — marking one of the strongest bull runs in the precious metal’s history — driven by a mix of geopolitical tensions, shifting central bank policies, and surging global demand for safe-haven assets.

If this momentum continues through December, it will be gold’s best annual performance since 1979, when prices soared more than 120% amid the global energy crisis and skyrocketing inflation in the United States.

Since the beginning of this year, the precious metal has repeatedly broken record highs, surpassing the psychological barriers of $3,000 and $4,000 per ounce for the first time in history.

Bull Market

This year’s gold bull market is fueled by several interlinked factors, most notably the unexpected political and economic shifts in major global economies.

The sharp escalation in trade tensions between the United States and China, along with growing expectations of US interest rate cuts in the coming months after a prolonged period of monetary tightening, have also played a key role.

Strong central bank buying — particularly from China, India, and Turkey — has further boosted global demand for gold as a hedge against currency risks and sovereign debt.

US Dollar Weakness

The decline of the US dollar from multi-year highs has been one of the main drivers behind gold’s surge, as investors seek to diversify their portfolios away from dollar-denominated assets.

At the same time, several Federal Reserve officials have hinted at a potential shift toward looser monetary policy by the end of the year, lowering US bond yields and restoring gold’s appeal as a preferred investment.

Geopolitical Tensions

Recent geopolitical developments in the Middle East and Eastern Europe have also fueled demand for gold as a safe haven.

Every escalation in conflict or political uncertainty drives investors toward stable assets that preserve value during turmoil — and gold remains the top choice in such times.

Bullish Forecasts

• Suki Cooper, Head of Metals Research at Standard Chartered Bank, said: “We expect gold to average $4,488 in 2026, with additional upside risks stemming from broader structural factors supporting the market.”

• HSBC raised its average gold price forecast for 2025 by $100 to $3,455 per ounce and projected that prices could reach $5,000 per ounce in 2026.

• Analysts at Bank of America and Société Générale now also expect gold to hit $5,000 per ounce in 2026.

• Goldman Sachs lifted its December 2026 gold forecast to $4,900 per ounce from $4,300, citing strong inflows from Western exchange-traded funds and sustained central bank purchases.

The US dollar rose against most major currencies during Tuesday’s trading, while the Japanese yen fell to a six-day low following the election of hardline conservative Sanae Takaichi as Japan’s first female prime minister. Traders are betting that her government could bring policy uncertainty and increased fiscal spending.

Takaichi, leader of the ruling Liberal Democratic Party, won Tuesday’s parliamentary vote to select the new prime minister — a development widely anticipated by investors after she secured support from the right-wing opposition party Ishin.

The yen fell 0.25% to ¥151.35 per dollar after touching ¥151.61, its weakest level since October 15. The currency also declined against both the euro and the British pound.

Hirofumi Suzuki, Chief FX Strategist at SMBC, said, “A fiscal stimulus package is expected, but it will likely be modest due to the difficulty of policy coordination.”

He added, “A sharp yen decline will probably be avoided, though mild downward pressure on the currency is likely to persist.”

Earlier on Tuesday, local media reported that Takaichi finalized plans to appoint former Regional Revitalization Minister Satsuki Katayama as finance minister.

In a Reuters interview last March, Katayama expressed a preference for a stronger yen — a stance that could prompt markets to reconsider further yen depreciation.

Still, Takaichi’s support for fiscal stimulus and monetary easing leaves investors cautious and complicates the Bank of Japan’s path toward rate hikes.

Frederic Neumann, Chief Asia Economist at HSBC, said, “From a political perspective, there may be a case to delay monetary tightening until the impact of fiscal easing becomes visible. This places the Bank of Japan in a very challenging position.”

Dollar Strengthened by Weak Yen and Improved Global Sentiment

Across broader markets, currencies traded within narrow ranges despite a generally upbeat mood after comments from US President Donald Trump on Monday, in which he said he expects to reach a trade deal with Chinese President Xi Jinping.

White House economic adviser Kevin Hassett also said the partial US government shutdown — now in its 20th day — is likely to end this week.

Concerns over credit risks in US regional banks eased slightly, helping to support risk sentiment.

The US Dollar Index, which measures the greenback’s performance against a basket of six major currencies, climbed to a six-day high, supported by yen weakness, rising 0.2% to 98.787.

Meanwhile, the euro slipped 0.15% against the dollar to $1.1623, gaining little from easing political uncertainty in France.

Gold prices fell by more than 2.5% in European trading on Tuesday, retreating from their record highs reached earlier on Monday, as profit-taking and corrective activity accelerated alongside pressure from a stronger US dollar against a basket of global currencies.

Prices also came under additional pressure from improving risk appetite in global financial markets amid easing trade tensions between Beijing and Washington and subsiding political concerns in Japan and France.

Price Overview

• Gold prices fell by 2.6% to $4,242.83, down from the opening level of $4,356.41, after hitting an intraday high of $4,375.40.

• At Monday’s close, gold rose by 2.45%, reaching an all-time high of $4,381.73 per ounce amid strong safe-haven demand.

US Dollar

The US Dollar Index rose by 0.3% on Tuesday, extending gains for the third consecutive session and reaching a one-week high of 98.89 points, reflecting continued strength of the greenback against a basket of major and minor currencies.

As is well known, a stronger dollar makes dollar-denominated gold less attractive to investors holding other currencies.

Improved Risk Appetite

Most global stock markets rose on Tuesday as risk appetite improved amid easing trade tensions between Beijing and Washington and fading political concerns in Japan and France.

US President Donald Trump said on Friday that imposing “comprehensive” tariffs on China would not be sustainable.

In a historic and unprecedented event, Japan turned a new page in its political history today after Sanae Takaichi won the position of Prime Minister, becoming the first woman ever to hold the country’s highest office.

In France, the political climate has stabilized somewhat after Prime Minister Sébastien Lecornu’s government gained a measure of confidence in the divided parliament, particularly following the decision to suspend the 2023 pension reform.

Gold Outlook

• Tim Waterer, Chief Market Analyst at KCM Trade, said that profit-taking and reduced safe-haven inflows have limited gold’s upside impact today. “Any dip in gold prices will be seen as a buying opportunity as long as the Federal Reserve remains on its current path toward rate cuts.”

• Waterer added that gold’s current upward trend still has room to continue, provided this week’s upcoming US Consumer Price Index data does not deliver any unexpectedly strong readings.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 11.45 metric tons on Monday — marking a seventh consecutive daily increase — bringing total holdings to 1,058.66 metric tons, the highest level since June 24, 2022.

In a historic and unprecedented event, Japan turned a new page in its political history today after Sanae Takaichi won the position of Prime Minister, becoming the first woman ever to hold the country’s highest office.

Takaichi’s victory followed a decisive parliamentary vote. According to Japan’s public broadcaster NHK, she secured 237 votes in the first round, eliminating the need for a runoff in the 465-seat lower house.

Her win came after the ruling Liberal Democratic Party (LDP) formed an alliance with the Japan Innovation Party, with reports indicating that the two sides signed a coalition agreement over the weekend.

According to Reuters, Takaichi agreed to support several policies of the Japan Innovation Party, including reducing the number of parliamentary seats, providing free secondary education, and freezing the food consumption tax for two years.

Earlier this month, Takaichi had faced a major political setback following the sudden split from Komeito — the LDP’s traditional coalition partner for more than 26 years.

Takaichi, one of the closest political allies of the late Shinzo Abe, is known for supporting the stimulus-oriented policies that defined the so-called “Abenomics,” raising expectations that she will pursue an expansionary approach to boost Japan’s stock market. However, such a stance could keep the yen under persistent pressure due to the continuation of ultra-loose monetary policy.

After winning the leadership of the ruling party, Takaichi pledged to strengthen Japan’s economy through massive public spending and criticized the Bank of Japan’s decision to raise interest rates.

Market Overview

• The Japanese yen reacted negatively to Takaichi’s official rise to power, declining broadly against a basket of global currencies.

• The Nikkei index hit a new record high, approaching the 50,000-point mark for the first time in history.