Gold and silver hovered close to record levels on Friday, extending a powerful rally that has defined much of 2025. A softer-than-expected U.S. inflation print has strengthened expectations that the Federal Reserve will continue easing policy, reinforcing the appeal of non-yielding assets. At the same time, geopolitical tensions and central-bank demand are amplifying gold’s traditional role as a portfolio stabilizer in an increasingly uncertain global environment.

US Inflation Data Reinforces the Rate-Cut Narrative

Spot gold traded near $4,330 an ounce in London, while silver remained close to recent record highs, after U.S. core inflation rose at its slowest pace since early 2021. The data has revived confidence that borrowing costs could move lower over the coming quarters, a dynamic that historically benefits precious metals by reducing the opportunity cost of holding them.

That said, the inflation signal is not without caveats. The figures were distorted by the recent U.S. government shutdown, which disrupted data collection and complicates month-to-month comparisons. Following its third consecutive rate cut last week, the Federal Reserve has avoided committing to a clear path forward, leaving markets to balance optimism with caution. Futures pricing currently implies only about a one-in-four chance of another cut in January, highlighting lingering uncertainty.

Central Banks and ETFs Tighten the Physical Market

Beyond monetary policy expectations, structural demand continues to underpin prices. Central banks have been persistent buyers of gold, diversifying reserves amid geopolitical fragmentation and currency risk. At the same time, exchange-traded fund investors are re-entering the market as yields decline, intensifying competition for a limited pool of physical bullion.

According to analysts at Goldman Sachs, falling U.S. rates are pushing ETF investors into direct competition with central banks, reinforcing upward pressure on prices. This dual demand dynamic helps explain why gold has risen roughly two-thirds this year, putting it on track for its strongest annual performance since 1979. Silver’s move has been even more dramatic, with prices more than doubling over the same period.

Geopolitics and Currency Moves Add Fuel

Geopolitical developments are also playing a meaningful role. Heightened tensions in Venezuela, following U.S. action to blockade sanctioned oil tankers, have boosted demand for safe-haven assets. While such events do not always have lasting economic effects, markets often react swiftly when risks intersect with already supportive macro conditions.

In Asia, currency moves added another layer of complexity. The Japanese yen weakened against the dollar even after the Bank of Japan raised interest rates to their highest level since 1995, underscoring how global capital flows remain anchored to relative growth and yield expectations rather than absolute rate levels. A firmer dollar typically caps precious metals, but gold’s resilience suggests underlying demand remains robust.

Platinum and the Broader Precious Metals Complex

Strength has not been confined to gold and silver. Platinum has also more than doubled this year, briefly trading above $1,980 an ounce, its highest level since 2008. Tightening conditions in the London market, precautionary stockpiling in the U.S. amid tariff risks, and strong Chinese demand following the launch of futures trading in Guangzhou have all contributed to the surge.

Outlook

Looking ahead, the trajectory of U.S. monetary policy, central-bank buying patterns, and geopolitical developments will remain decisive for precious metals. While short-term volatility is likely as markets recalibrate rate expectations, the broader backdrop suggests gold and silver are increasingly viewed as strategic holdings rather than purely tactical trades.

If inflation continues to cool and policy easing resumes, the case for sustained strength in precious metals remains intact. At the same time, stretched positioning and record prices mean investors may need to manage risk carefully, balancing long-term conviction with near-term price sensitivity.