Historical Rise of Gold and Silver Sparks Surge in Safe-Haven Asset Preference

A groundbreaking movement has been detected in the spot gold market. Gold, which rose nearly $52 in a single day, has surpassed its all-time high of $4,531.34 per ounce, indicating how desperate investors are for safe assets. During the same period, silver also showed strong performance, rising for five consecutive days and exceeding $75 per ounce, with a weekly cumulative increase of 4.5%.

**Geopolitical Uncertainty Boosts Precious Metals**

According to Bloomberg analysis, the surge is driven by geopolitical tensions and a weakening dollar. As the Venezuela crisis worsens, with the U.S. increasing sanctions and pressure on Nicolás Maduro's government, risk-averse investors are turning to precious metals as a means of asset protection. Additionally, U.S. President Donald Trump announced that the U.S. military struck ISIS terrorists in northwestern Nigeria, further heightening global security concerns.

**Weakening Dollar Enhances Precious Metals Appeal**

The Bloomberg dollar index fell 0.8% this week, marking its largest weekly decline since June. As the dollar weakens, dollar-denominated assets like gold and silver become relatively cheaper, increasing demand from international investors. This dollar weakness is a key factor driving the rise in spot precious metals.

**2024 Precious Metals Market Aiming for 45-Year Highs**

Since the beginning of the year, gold has gained approximately 70%, while silver has surged over 150%, significantly outpacing previous years. Both assets are expected to record their best annual performance since 1979. Major factors fueling this rally include continuous central bank gold reserve increases, large inflows into ETFs, and three rate cuts by the Federal Reserve. As interest rates decline, the opportunity cost of holding non-yielding precious metals decreases, prompting traders to continue buying, with expectations of further rate cuts in 2026.

**ETF Buying Surge Emerges as Key Driver of Rally**

Massive inflows into precious metals ETFs have been a primary catalyst for this rally. According to the World Gold Council, gold ETF holdings increased every month except May. Notably, the world's largest precious metals ETF, SPDR Gold Trust, saw holdings grow by over 20% this year, clearly reflecting a preference for safe assets among institutional and individual investors. The demand for 12-ounce gold transactions is also rising, indicating participation from investors of various scales entering the market.

**Silver’s Unique Supply Imbalance Deepens**

Silver's rise has been even steeper than gold. After the October "short squeeze," there was an influx into London vaults, but a significant portion of available spot silver remains concentrated in New York. This situation coincides with the U.S. Department of Commerce's ongoing investigation into whether "importing critical minerals threatens national security." Depending on the outcome, future taxes or trade restrictions on silver could be imposed, fueling traders' accumulation of physical silver.