Recently, the precious metals market has been quite active. Geopolitical sudden developments have triggered a surge in risk aversion sentiment, with noticeable increases in buy orders for gold and silver.

Spot gold performed strongly on Tuesday, rising 0.8% to $4,485.39 per ounce, approaching the December record high of $4,549.71. US gold futures for February delivery surged by 1%, trading at $4,496.10. From the nearly 3% rally in the previous trading day, it’s clear that market risk appetite is indeed adjusting.

Interestingly, traders in precious metals now perceive the level of risk to be even higher than those in the stock and bond markets. This wave of safe-haven buying continues to push up gold and silver prices. Gold prices rose 64.4% last year, marking the best annual performance since 1979, indicating that the attractiveness of this asset class is indeed increasing.

Looking at silver’s performance, it’s even more impressive. Spot silver jumped 5.4% to $80.68 per ounce, soaring 147% for the year, setting the strongest annual gain on record. This increase reflects a simultaneous rise in industrial demand and investment buying. Platinum rose 7.2% to $2,435.20 per ounce, and palladium increased 5.9% to $1,821.68 per ounce, with the entire precious metals sector on the move.

The market is now awaiting US employment data to gauge the Federal Reserve’s interest rate policy. The forecast is for an increase of 60,000 jobs, slightly below the previous month. Traders are already reflecting expectations of two Fed rate cuts this year. Once in a low-interest-rate environment, non-yielding gold typically becomes more attractive. Morgan Stanley predicts that, supported by falling interest rates, changes in central bank leadership, and strong buying from central banks and funds worldwide, gold prices could rise to $4,800 per ounce in the fourth quarter of this year.

Speaking of which, this wave of risk aversion demonstrates the interaction between traditional assets and market expectations. When uncertainty increases, the allocation value of precious metals becomes more apparent.