The spot price of London gold hit a historical peak of $4420.47 this year, with an increase of up to 68.05%. A 'currency defense battle' involving global central banks, hedge funds, and ordinary investors is intensifying in the precious metals market.
The gold market is experiencing a historic carnival—on December 22, the spot price of London gold surged to $4420.47 per ounce, once again breaking historical records.
The performance of silver has been even more astonishing, with an increase of nearly 140% this year, marking the strongest annual performance since 1979.
1. Historical high
● On December 22, 2025, the international gold market welcomed 'Mad Monday.' The spot price of London gold broke through the $4420 mark during trading, reaching $4420.47 per ounce, setting a new historical high. As of that day, the international gold price increase for the year had reached 68.05%.
● On the same day, silver prices simultaneously hit a historic high of $69.45 per ounce, with platinum and palladium futures soaring, causing the non-ferrous metals market to 'boil' over.
II. Multiple Driving Factors: Macro and Micro Resonance
The current gold market trend is driven by multiple factors, combining traditional drivers with new variables.
● The Federal Reserve's shift in monetary policy is the primary catalyst. In September and December 2025, the Federal Reserve cut interest rates by 25 basis points twice. Futures market pricing shows that traders expect an additional 75-100 basis points of rate cuts in 2026. This expectation has weakened the relative attractiveness of the US dollar and enhanced gold's status as an alternative store of value.
● The global central bank gold buying spree has broken the traditional supply-demand balance. According to the World Gold Council's latest data, in the second quarter of 2025, the global central bank's net gold purchases reached 182 tons, marking the tenth consecutive quarter of net increases. Notably, central banks in emerging markets, such as Poland and Kazakhstan, are significantly increasing their gold reserves. The People's Bank of China has increased its gold holdings for eleven consecutive months, totaling over 200 tons.
● Escalating geopolitical tensions drive safe-haven demand. The situation in Venezuela and attacks on shipping in the Black Sea have re-injected a geopolitical risk premium into gold prices. Historical data shows that during periods of escalating conflict, gold typically gains an average safe-haven premium of 5-8%.
● Technical breakthroughs trigger follow-up buying. When gold prices break through previous highs, a large amount of technical buying and stop-loss orders are triggered, leading institutional and retail investors to increase their allocations to gold-related assets, forming a positive feedback loop between price and capital inflow.
III. KOL Perspective: The Return of 'Currency Depreciation Trades'
● Robin Brooks, former chief forex strategist at Goldman Sachs, presented a thought-provoking perspective. He believes that gold reaching new highs proves that 'currency depreciation trades' have restarted and indicated, 'This is not an ordinary precious metals bull market, but a manifestation of shaken confidence in the fiat currency system.'
● Brooks points out a key phenomenon: not only are traditional precious metals like gold and silver rising, but even currencies from low-debt countries like the Swedish krona and Swiss franc are beginning to show a high positive correlation with precious metals.
● He explained: 'This indicates that investors are searching for any asset that can hedge against currency depreciation risks, not just traditional safe-haven assets. Historically, the Swedish krona is a highly volatile currency and not considered a safe haven, but now it is highly correlated with gold's movements.'
● Brooks' data charts show that among G10 currencies, the Swiss franc's positive correlation with gold has reached 0.73, while the Swedish krona has reached 0.68. This synchronicity is extremely rare over the past twenty years.
● The US dollar appears relatively stable on the surface, but Brooks warns that the strengthening of the dollar against the extremely weak yen masks its broad weakness against a basket of currencies. In fact, the dollar trade-weighted index has fallen about 6% from its yearly high, indicating a decline in the dollar's overall purchasing power.
IV. The Divergence of Bitcoin and Gold
Bitcoin, dubbed 'digital gold,' has not followed gold to new highs, showing significant divergence in their trends.
As of December 22, Bitcoin's price hovers around $88,000, far below the $120,000 peak reached in October. Since 2025, gold has increased by over 68%, while Bitcoin has only risen by about 15%.
Analysis points out that Bitcoin's correlation with the Nasdaq is now as high as 0.5, while its correlation with gold is only 0.2. This means Bitcoin is more tied to technology stock performance rather than traditional safe-haven assets.
The reasons for this divergence include:
● The structure of market participants differs: the gold market is primarily dominated by central banks, institutional investors, and long-term holders, while the cryptocurrency market is more driven by retail investors and leveraged trading.
● Differences in liquidity environment: Gold benefits from expectations of global liquidity expansion, while the cryptocurrency market faces regulatory pressures and capital outflows.
● Functional positioning change: Bitcoin is transitioning from a 'store of value' to a 'risk asset,' increasingly influenced by technology stock sentiment.
Blockland's multi-asset fund manager Jalen Blockland pointed out: 'The yen carry trade continues to support gold, but has limited impact on Bitcoin. Investors borrow low-interest yen to purchase high-yield assets, with gold being one of the main targets of such trades.'
Data shows that Japan's 10-year government bond yield has nearly doubled this year to 2.08%, yet the Japan-US yield spread remains as high as 2.5 percentage points, continuing to encourage arbitrage trading.
V. Market Divergence and Future Outlook
Faced with historical highs in gold, there is a clear divergence in market expectations for future trends.
● Optimistic view: Goldman Sachs expects gold to rise further in 2026, setting a base case target of $4,900 per ounce, with upside potential. Analysts point out that if the Federal Reserve's rate cuts exceed expectations, gold prices could even break the $5,000 mark.
● Cautious view: UBS strategists believe that gold may experience a technical correction in the short term and advise investors to wait for better entry points. They point out that the relative strength index (RSI) for gold has entered the overbought zone, indicating short-term overheating risks.
● The framework of real interest rates remains key to understanding gold prices. Gold has a negative correlation with real interest rates, and the current US real interest rate (10-year inflation-protected bond yield) is about 1.2%. If it declines further, it will provide more upward space for gold.
● Citigroup's analysis team believes that the gold market may be undergoing structural changes: 'Central bank gold purchases are continuously altering the supply-demand dynamics of gold, detaching it from traditional analytical frameworks. Gold is no longer just a hedge against inflation but also a barometer of geopolitical risks and pressure on national balance sheets.'
GF Securities reminds investors that short-term volatility risks in gold cannot be ignored: 'Unless stimulated by unexpectedly positive factors, London gold is expected to consolidate and fluctuate before the end of the year, with new highs anticipated in January next year.'
The pace of central bank gold purchases continues. The People's Bank of China's gold reserves account for only 6.7% of total asset reserves, while developed countries in Europe and America generally exceed 70%. The market's expectations for the Federal Reserve to cut interest rates in 2026, combined with the reality of the US's $36 trillion debt to GDP ratio reaching 124%, provide a long-term soil for 'currency depreciation trades.'
Gold and Bitcoin, two assets regarded as symbols of wealth by different generations, are undergoing a revaluation amidst market turbulence in 2025.
Join our community to discuss and become stronger together!
Official Telegram community: https://t.me/aicoincn
AiCoin Chinese Twitter: https://x.com/AiCoinzh
OKX Welfare Group: https://aicoin.com/link/chat?cid=l61eM4owQ
Binance Welfare Group: https://aicoin.com/link/chat?cid=ynr7d1P6Z
