Gold surpassed the $5,200 mark for the first time on Wednesday, following a rise of more than 3% on Tuesday. This surge occurred as the dollar plummeted to its lowest point in nearly four years, amid ongoing geopolitical concerns and in anticipation of a U.S. Federal Reserve monetary policy decision.
As of 01:53 GMT, spot gold increased by 0.6% to $5,219.97 per ounce, having earlier reached a record high of $5,224.95. This marks an over 20% increase since the beginning of the year. U.S. gold futures for February delivery also jumped by 2.6%, reaching $5,216.80 per ounce.
“The rise in gold prices is largely attributed to the strong inverse correlation with the dollar,” commented Kelvin Wong, a senior market analyst at OANDA. He noted that the recent price rise during the U.S. session was influenced by President Donald Trump’s casual remarks regarding the dollar. These remarks suggested a general consensus within the White House favoring a weaker dollar moving forward.
The U.S. dollar is currently facing a “crisis of confidence,” struggling near four-year lows, which has intensified the selling of the currency. This follows President Trump’s statement that the dollar’s value is “great” when questioned about its significant decline.
Meanwhile, U.S. consumer confidence has dropped to its lowest level in over 11 and a half years in January, driven by growing concerns over a sluggish labor market and high prices. President Trump also mentioned that he will soon announce his nominee for the head of the U.S. central bank, predicting that interest rates will decrease once the new chair assumes the position.
The Federal Reserve is widely expected to maintain its current interest rates at the ongoing January monetary policy meeting. According to Wong, immediate resistance for gold could emerge around $5,240 per ounce. On Tuesday, Deutsche Bank predicted that gold could reach $6,000 per ounce by 2026, due to sustained investment demand as central banks and investors increase their allocations to non-dollar and tangible assets.
In other precious metals, spot silver rose by 0.6% to $113.63 an ounce, after achieving a record high of $117.69 on Monday. The metal has surged nearly 60% this year. Spot platinum increased by 1.5% to $2,679.15 per ounce after reaching a record $2,918.80 on Monday. Palladium also saw an uptick, rising 0.9% to $1,951.93 per ounce.
