Gold prices rose above $5,300 an ounce for the first time on Wednesday, as declining confidence in the U.S. dollar and concerns over the independence of the U.S. Federal Reserve boosted demand for the safe-haven metal.
Spot gold rose 1.7% to $5,275.68 an ounce by 0940 GMT, after hitting a record high of $5,311.31. Prices rose more than 3% in the previous session.
U.S. gold futures for February delivery rose 3.7% to $5,271.70 an ounce.
“Gold prices are rising not just because of market anxiety, but also because confidence in the global financial and fiscal order is shifting to a more cautious stance,” said Linh Tran, senior market analyst at XS.com.
On Wednesday, the dollar struggled near a four-year low after President Donald Trump dismissed recent dollar weakness, making dollar-priced bullion more attractive to overseas buyers.
President Trump also said he would soon announce the selection of a Fed chair, and predicted that interest rates would fall once the new chair takes office.
“The truth is that none of the proposed nominees will be as resistant to President Trump’s demands as Powell is, which is good for gold,” said Nitesh Shah, commodities strategist at WisdomTree.
Gold that doesn’t earn interest usually performs better when interest rates are low. The Federal Reserve is widely expected to keep interest rates unchanged at its current January monetary policy meeting. The metal has climbed more than 20% since the beginning of the year, building on last year’s record rally. Analysts at Deutsche Bank say gold prices could rise to $6,000 an ounce this year due to strong investment demand. Retail demand in Shanghai and Hong Kong is also strong despite record prices.
“On the jewelery side, I think prices will moderate demand, but I think high prices may be helping a little bit of speculative investment from the retail side at the moment,” Shah added.
Spot silver fell 0.2% to $112.82 an ounce after hitting a record high of $117.69 on Monday. It’s up nearly 60% so far this year.
Spot platinum hit a record high of $2,918.80 on Monday, rising 0.1% to $2,644.35 an ounce, while palladium also rose 0.1% to $1,935.57.
