As the final trading week of 2025 begins, global financial markets have witnessed a dramatic surge in precious metals, with silver, platinum, and palladium all striking new all-time highs before paring some gains.
Precious Metals Rally Turns Parabolic
Silver climbed above $80 per ounce for the first time ever on Monday, before profit-taking triggered a 3.3% pullback to around $76. This marks a staggering rise from just $29 an ounce at the start of the year and $56 at the beginning of December. The rapid ascent prompted a warning from Tesla and SpaceX CEO Elon Musk, who cautioned that manufacturers could suffer from the soaring costs.
Gold, though down 1.3% this morning to $4,472 an ounce, remains on track for its most significant annual gain since 1979, with an increase of more than 70% for the year.
Charu Chanana, chief investment strategist at Saxo Bank, explained the rally to Reuters. She stated that hopes for interest rate cuts from the US Federal Reserve, combined with hedging against geopolitical and fiscal uncertainty, have fuelled the boom. "Add supply worries and the move has turned parabolic," Chanana said, while also warning that the late-year vertical surge, particularly in silver, raises the risk of heightened volatility.
Asian Markets Mixed as Dollar Weakens
Asian equity markets presented a mixed picture. South Korea's Kospi jumped 2.2% to a two-month peak, setting it on course for its strongest annual performance since 1999. Taiwan's exchange also rose by 0.9%. However, other regional markets saw slight declines. The broad MSCI index of Asia-Pacific shares edged up by 0.2%. Most Asian markets have secured double-digit gains this year, despite the backdrop of Donald Trump's global tariffs.
The US dollar hovered near a three-month low, reflecting widespread market anticipation of further Fed rate cuts in the coming year.
Oil Rises on Geopolitical Tensions and Ukraine Talks
Oil prices advanced by 1%, driven by renewed Middle East tensions and the latest developments in Ukraine peace negotiations. Unrest in the region, including Saudi air strikes in Yemen and Iran's declaration of a "full-scale war" with the US, Europe, and Israel, has sparked fears of potential supply disruptions. The global benchmark, Brent crude, traded 61 cents higher at $61.25 a barrel.
On the diplomatic front, US President Donald Trump stated that a deal to end the war in Ukraine is "closer than ever" following a two-hour meeting with Ukrainian President Volodymyr Zelenskyy in Florida on Sunday. Trump revealed a draft agreement was nearly "95% done," but admitted that thorny questions regarding the future of the eastern Donbas region remain unresolved.
In Europe, traders are watching to see if the "Santa rally" that propelled Wall Street to record highs on Christmas Eve will extend to London in this shortened trading week. European futures indicated a slightly higher open, though trading volumes are expected to remain thin throughout the holiday period. Markets are closed on Thursday for New Year's Day.
