Gold prices rose during trading on Tuesday, recovering some of their sharp losses from the previous session, as weak year-end liquidity contributed to increased volatility, amid expectations that fundamental factors will push precious metals towards new record levels during 2026.
Spot gold rose 0.7% to $4,361.71 an ounce, after hitting a record high of $4,549.71 on Friday. The precious metal had fallen on Monday to its lowest level since December 17, marking its biggest one-day percentage drop since October 21.
US gold futures for February delivery also rose by 0.8% to $4,377.20 an ounce.
High volatility with declining liquidity
Analysts believe that the sharp sell-off that began with the opening of trading on Monday reflects the large volatility in the market, which was exacerbated by weak trading volumes related to the holiday season and the end of the year.
The relative strength indices for both gold and silver retreated from overbought territory on Monday, a technical indication that the upward momentum has temporarily subsided after a strong rally.
Despite this decline, gold continues to record exceptional performance during 2025, after its prices rose by about 66% since the beginning of the year.
Key drivers supporting the upward trend
This strong rally was driven by interest rate cuts, increasing bets on further easing of US monetary policy, along with escalating geopolitical tensions, strong demand from central banks, and rising holdings of gold-backed exchange-traded funds.
Traders expect at least two US interest rate cuts over the next year, an environment that typically favors non-yielding assets, such as gold, as the opportunity cost of holding them declines.
In this context, the spot price of silver rose by 3.1% to $74.49 an ounce, after recording a historic high of $83.62 in the previous session, despite recording its biggest daily loss since August 11, 2020, on Monday.
Silver is outperforming and the long-term outlook is positive.
Silver has made strong gains since the beginning of the year, rising 158% and far outperforming gold, driven by its inclusion in the list of vital metals in the United States, along with supply constraints, declining inventories, and rising industrial and investment demand.
Analysts expect the long-term upward trend for both gold and silver to continue, with price targets set for the next six months at $5,010 per ounce for gold and $90.90 for silver.
As for other metals, spot platinum rose 1.8% to $2,146.81 an ounce, after recording its biggest daily drop in history on Monday following its record high of $2,478.50.
Gold at settlement yesterday
Gold prices fell at the close of trading on Monday, amid profit-taking after the precious metal reached a new record high at the end of last week's trading.
Gold futures for February delivery fell 4.6%, or $209.10, to $4,343.60 an ounce, after the most active contract hit a record close for the 52nd time this year at the end of Friday's session.
Wide fluctuations in platinum and palladium
In contrast, palladium fell 0.7% to $1,605.72 an ounce, after losing about 16% of its value during Monday's session, in one of the sharpest daily declines the metal has seen.
