Gold prices extended gains at the start of the year after ending 2025 with a 64% rise, the strongest annual performance since 1979, as investors bet on further monetary easing by the US Federal Reserve.
Gold futures rose 1.2% to $4,392.70 an ounce, while spot prices climbed 1.5% to $4,384.93 at the time of writing.
“Precious metals are commencing 2026 in much the same fashion as they performed in 2025, which is to say with forward momentum,” said Tim Waterer, chief market analyst at KCM Trade.
Bullion surged last year, driven by interest rate cuts, expectations of additional easing by the Fed, ongoing geopolitical tensions, strong buying by central banks and rising holdings in exchange traded funds.
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Markets are currently pricing in at least two US rate cuts this year, despite recent data showing resilience in the labour market. Assets that do not generate income typically benefit when interest rates are low.
“[Precious metals] seem to be making amends for the year-end selling, which afflicted them earlier in the week. Year-end position-squaring pressures have eased and gold is kicking off 2026 with gains, now that fundamentals are again in focus,” Waterer added.
Oil prices edged higher at the start of 2026 after posting their steepest annual decline since 2020, as traders weighed geopolitical tensions and expectations that OPEC+ would keep supply curbs in place.
Brent crude futures rose 0.5% to $61.17 a barrel, while West Texas Intermediate gained 0.4% to $57.68.
In the Middle East, tensions between OPEC producers Saudi Arabia and the United Arab Emirates over Yemen intensified after flights were halted at Aden airport on Thursday. The development came ahead of a virtual meeting of OPEC+, scheduled for 4 January.
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Traders broadly expect the group to maintain its pause on output increases through the first quarter, said June Goh, a senior analyst at Sparta Commodities.
“2026 will be an important year on assessing OPEC+ decisions for balancing supply,” she said, adding that China was likely to continue building crude stockpiles in the first half of the year, providing a floor for prices.
Brent and WTI ended 2025 with losses of nearly 20%, the weakest annual performance since 2020, as global supply outstripped demand and geopolitical risks weighed on sentiment. It marked the third consecutive yearly decline for Brent and the longest losing streak on record.