Gold prices surpassed $5,300 per ounce for the first time on Wednesday as demand for the safe-haven commodity increased due to waning faith in the US dollar and worries about the US Federal Reserve’s independence.
By 0940 GMT, spot gold had risen 1.7% to $5,275.68 an ounce from a record $5,311.31. In the prior session, prices increased by more than 3%.
“Gold is rising not merely due to market anxiety, but also because confidence in the global monetary-fiscal order is shifting towards a more cautious stance,” said Linh Tran, senior market analyst at XS.com.
The U.S. dollar struggled near four-year lows on Wednesday after President Donald Trump brushed off its recent weakness, making dollar-priced bullion more attractive to overseas buyers.
Additionally, Trump stated that he will soon announce his choice to lead the Fed and that interest rates will drop after the new chair takes office.
When interest rates are low, gold, which doesn’t yield interest, usually does well. At its ongoing January monetary policy meeting, the Fed is mostly expected to keep rates unchanged. FEDWATCH Building on last year’s record gains, the metal has risen over 20% since the beginning of the year.
Due to ongoing investor demand, Deutsche Bank analysts predict that gold prices could reach $6,000 per ounce this year. Despite the record costs, retail demand has also been strong in Shanghai and Hong Kong.
“On the jewellery side, I think the prices will soften demand, but I think the high prices may, at the moment, be assisting a little bit of speculative investment from the retail side,” Shah added.
After reaching a new high of $117.69 on Monday, spot silver fell 0.2% to $112.82 per ounce. So far this year, it has increased by almost 60%.