In 2025, global market volatility will continue to intensify under the multiple impacts of tariff uncertainty, inflationary pressure and geopolitical conflicts. However, the precious metals market has emerged from a magnificent bull market - gold set a new all-time high for the 50th time this year, exceeding US$4,480 per ounce, and New York gold futures even stood at the US$4,500 mark; silver simultaneously surged above US$70, platinum exceeded US$2,100, and palladium doubled to US$1,800. This rising frenzy covering all categories of precious metals is not only due to short-term market drivers, but also highlights the irreplaceable strategic value of gold in investment portfolios in a turbulent environment.

Multiple positive resonances push up precious metal prices

The surge in precious metals is not driven by a single factor, but is the result of the joint action of geopolitics, monetary policy, capital flows and supply and demand patterns. The escalation of geopolitical tensions has become a direct catalyst. The U.S. blockade of Venezuelan oil tankers has intensified the risk of regional conflicts, amplified the safe-haven properties of gold, and promoted it to complete a textbook breakthrough in a holiday-light market. The market is generally betting that the Federal Reserve will further cut interest rates next year. The low interest rate environment is naturally beneficial to non-interest-bearing precious metals, providing easy liquidity support for price increases.

The strong influx of funds is the core driving force for the continuation of the market. Gold has risen by 70% this year and is expected to record its best annual performance since 1979. Its rise has been dually supported by large-scale gold purchases by central banks and continued inflows of ETF funds - except for May, gold ETF holdings have grown every month. Silver’s performance was even more dazzling, with an increase of 140% during the year. In addition to the pursuit of speculative funds, the supply dislocation in major trading centers after the historic short squeeze in October further aggravated the imbalance between supply and demand and helped push prices to new highs.

In addition, U.S. President Trump’s aggressive trade policies and threats to the independence of the Federal Reserve have triggered market concerns about currency depreciation. Funds have been withdrawn from sovereign bonds and denominated currencies and turned to precious metals for value preservation, adding fuel to the bull market. Institutions' optimistic expectations for the market outlook further strengthened the upward momentum. Goldman Sachs and other investment banks predict that gold prices will continue to rise in 2026, with the basic scenario target locked at $4,900 per ounce, and there are significant upward risks; gold bulls have set $5,000 as their core target for next year, and the market's bullish sentiment toward precious metals is unprecedentedly high.

Gold’s strategic value in investment portfolios highlighted

Behind the boom in precious metals, gold, as the "ballast stone" for asset allocation, has become increasingly important in the current market environment. Since 2025, global market volatility has intensified, and the volatility of U.S. stocks and European stocks has increased significantly. Especially around the announcement of tariff policies, stock volatility has soared; and the positive correlation between stocks and bonds has further pushed up the overall risk of the investment portfolio. What's even more serious is that the returns from traditional diversified investments continue to weaken, and investors are eager to find alternative tools to effectively manage volatility. Gold fills that gap. As a classic safe-haven asset, gold's correlation with stocks and fixed income assets has been low for a long time, making it an ideal choice for optimizing investment portfolios.

In the current macro environment, inflation concerns dominate—the ratio of growth volatility to inflation volatility is at a low level. Inflation shocks have caused simultaneous pressure on stocks and bonds. Gold has significant hedging capabilities against inflation and can effectively diversify portfolio risks. Data shows that adding 5% gold to an investment portfolio can reduce the overall risk by nearly 5%, while gold’s contribution to portfolio risk is only 1.9%, which is almost negligible. It is worth noting that while gold volatility has increased in 2025 as prices have risen, it remains essentially flat at long-term averages and well below previous highs during similar strong market periods. This means that while gold has achieved substantial gains, its trend remains stable and orderly, and the surge in volatility caused by short-term price surges can quickly return to normal, highlighting its resilience as a strategic asset. In contrast, the volatility of risky assets such as stocks has been more dramatic, further confirming gold's unique value in balancing returns and risks.

The dual value of precious metals in volatile markets

The precious metal market in 2025 will not only stage a bull market carnival with record-breaking prices, but also demonstrate the strategic significance of gold as the core of portfolio risk control. In the short term, geopolitical conflicts, interest rate cut expectations, capital inflows and other factors will still provide support for precious metal prices. Institutions' optimistic outlook for 2026 also gives strong expectations for the market to continue. In the long term, against the backdrop of intensifying macroeconomic uncertainty, the failure of traditional diversified investments, and lingering inflation risks, gold's low correlation, low risk contribution, and high resilience make it a "safety cushion" for investors to resist market fluctuations. For investors, the dual value of precious metals deserves attention: they can not only seize short-term market opportunities and share the benefits brought by price increases; they should also recognize the long-term strategic significance of gold in asset allocation, optimize the portfolio structure through reasonable allocation of gold, and reduce overall risks. In a market environment full of unknowns, precious metals, especially gold, are becoming a deterministic choice amid uncertainty in their dual roles of "market pioneer" and "cornerstone of risk control".