Precious metals break records amid fluctuating commodity prices

ISTANBUL

Precious metals hit new records this week, with gold reaching as high as $4,420.3 and silver $69.5 per pound, while commodity prices have been fluctuating since US President Donald Trump took office early this year.

At the same time, platinum reached its highest since July 2008 at $2,076.6, and palladium hit its highest since January 2023 at $1,805.5 per pound.

The US Federal Reserve has so far cut a total of 75 basis points off its policy rate this year, affecting precious metal prices. The Fed is expected to cut rates twice next year with Trump’s aggressive support, influencing gold prices in particular.

Ongoing geopolitical risks and supply concerns also contribute to the price hikes in precious metals as the Russia-Ukraine war continues, while the US-Venezuela tensions have recently influenced gold and silver.

Central banks, on the other hand, continue buying gold, playing a key role in the rise in gold prices.

Gold and silver also rose over the developments in India, where the country’s pension regulatory body was approved to allocate 1% of its assets to approved gold and silver exchange-traded funds.

Silver came in high demand this year, led by industrial needs, particularly in solar energy, electronics, and electric vehicle (EV) sectors. The US also decided to include silver in its list of critical minerals, which means the demand for silver will keep rising.

At the same time, China’s Securities Regulatory Commission approved futures and options contracts for platinum and palladium used in the auto and industrial sectors, pushing up the two metals’ prices, while supply constraints also contributed to the rise.

Declining mining supply, uncertainties over US tariffs, and investors turning to platinum and palladium from gold pushed up prices, while geopolitical risks due to Russia influenced palladium prices in particular.

South Africa’s weak production, as well as earlier tensions between Trump and US billionaire Elon Musk, who grew up in South Africa, contributed to the rise in platinum prices.

The tensions between the two rich men led to the expectations that Trump would reduce or stop EV incentives, and consequently his support for Musk’s EV brand Tesla.

Platinum, being used in carbon-fueled vehicles, rose in price with the expectations of more combustion-engine cars being sold than EVs due to Trump and Musk’s broken alliance.

Markets rally on estimates of pro-rate-cut Fed chair to come

Zafer Ergezen, a futures and commodity markets expert, told Anadolu that the Fed’s rate cut in December influenced precious metals and the commodity prices to go up already, and the expected change of Fed chair next year also gave rise to the motivation in the market that whoever replaces Jerome Powell will be more receptive to rate cuts.

He noted that continued rate cuts in 2026 would lead to an economic recovery and more demand for commodities, leaving a positive impact on silver, platinum, and palladium. He noted that, while the developments throughout the year impacted precious metals across the board, the effects on gold were relatively lower.

“The gold to silver ratio fell below the 65 level, marking a serious pullback, one that we haven’t seen in many years — this shows the market’s expectations for rate cuts are strong,” the expert said.

Ergezen added that the US inflation data, which came in below estimates, was the key driver in gold prices, as inflation coming in below expectations leads to projections that rate cuts will continue, and possibly increase.