This post was originally published on this site.
Gold prices fell on Wednesday morning but remained on course for their strongest annual rise in more than four decades.
Gold futures dropped 1.1% to $4,339.30 an ounce, while spot prices declined 1.2% to $4,325.58 at the time of writing.
Bullion has risen by more than 60% in 2025, marking its largest yearly increase since 1979, when geopolitical developments including the Iranian revolution drove prices sharply higher.
“Maybe towards the end of the first [quarter of 2026], we could see [gold] test $5,000. Certainly, it seems like the sort of catalysts animating gold, especially over the course of the past year, have become self-sustaining,” said Ilya Spivak, head of global macro at Tastylive, speaking to Reuters.
Read more: FTSE 100 LIVE: London market wobbles as stocks ride out shocks to notch stellar year
Gold has been one of the strongest performing assets of 2025, underpinned by the Federal Reserve’s pivot towards looser monetary policy. The US central bank cut interest rates three times throughout the year, reducing the opportunity cost of holding assets that do not generate income and lifting demand for bullion.
Investors are also pricing in further rate cuts in 2026, adding to the positive outlook for gold.
Oil prices edged lower on Wednesday and were set to post a decline of more than 15% for 2025, as rising supply outweighed demand in a year shaped by wars, higher tariffs and increased output from OPEC+ alongside sanctions on Russia, Iran and Venezuela.
Brent crude futures fell 0.2% to $61.19 a barrel, while West Texas Intermediate dropped 0.3% to $57.80.
Brent futures are down almost 18% for the year, the steepest annual percentage fall since 2020, and are on track for a third consecutive year of losses, the longest losing run on record.
US West Texas Intermediate crude was heading for an annual decline of 19%. Average prices for both benchmarks in 2025 are the lowest since 2020, according to LSEG data.
Read more: The most popular memecoins of 2025
Jason Ying, a commodities analyst at BNP Paribas, said Brent could fall to $55 a barrel in the first quarter before recovering to $60 a barrel for the remainder of 2026, as supply growth is expected to normalise while demand remains flat.
“The reason why we’re more bearish than the market in the near term is that we think that US shale producers were able to hedge at high levels,” he said.
“So the supply from shale producers will be more consistent and insensitive to price movements.”
Sterling was broadly steady against its peers on the final trading day of 2025, supported by expectations that the UK currency will continue to outperform next year.
The pound was little changed against the dollar at $1.3449 and was also flat versus the euro at €1.1460.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six major currencies, was steady at 98.32.
Stocks: Create your watchlist and portfolio
Sterling has remained resilient amid market expectations that it will face fewer interest rate cuts in 2026 than other major currencies, reflecting a more cautious easing path by the Bank of England.
Earlier this month, the BoE cut interest rates by 25 basis points to 3.75% and signalled that monetary policy would continue on a gradual downward trajectory.
In equities, the FTSE 100 (^FTSE) was trading flat on Wednesday morning, around 9,946 points and on track for its best year since 2009. For more details on market movements, check our live coverage here.
Download the Yahoo Finance app, available for Apple and Android.