Gold extended its record-breaking rally on Thursday, surging past $5,500 an ounce as investors piled into safe-haven assets amid mounting geopolitical and economic strains.
The precious metal jumped more than 2% by midday in Asia and is now up around 27% so far this year. Prices only broke through the $5,000-an-ounce threshold for the first time on Monday and have continued to accelerate sharply since.
The rally has been driven by a combination of strong safe-haven demand, sustained central bank buying and a weaker US dollar, which makes gold cheaper for investors holding other currencies.
Markets showed little reaction to the Federal Reserve’s widely expected decision to leave interest rates unchanged, or to remarks from chair Jerome Powell following the announcement.
“The rally in the precious metals has kind of taken on a life of its own at this point,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. While Grant said gold appears overbought and vulnerable to a correction, he noted that persistent buying on dips continues to favour further upside, with $5,400 the next key target.
The Fed cited still-elevated inflation alongside solid economic growth in its statement, offering little guidance on when rate cuts might resume. Governors Christopher Waller and Stephen Miran dissented, voting in favour of a quarter-point cut.
Powell acknowledged that inflation in December was likely still well above the Fed’s 2% target. Separately, US President Donald Trump said he would soon announce his choice to replace Powell when his term ends in May.
Gold, which typically benefits from lower interest rates and heightened uncertainty, is now up more than 25% so far this year, building on last year’s record gains.
Elsewhere, crypto group Tether said it plans to allocate 10%–15% of its investment portfolio to physical gold, according to chief executive Paolo Ardoino, adding to bullion already used to back some of its products.
Silver also reached a fresh all-time high on Thursday, coming close to breaching the $120-an-ounce level. The white metal has been supported by investors seeking a cheaper alternative to gold, alongside supply constraints and strong momentum-driven buying. Silver prices are now up more than 60% so far this year.
Platinum climbed 2.5% to $2,707.67 an ounce after touching a record $2,918.80 on Monday, while palladium jumped 7.2% to $2,073.50.
This unprecedented political climate has led investors to seek refuge in precious metals, steering them away from the US dollar. Market analysts suggest that Trump’s unpredictability has heightened economic uncertainties, prompting a notable flight to safety among investors.
The growing appeal of gold is evident, with savvy investors shifting their portfolios to hedge against potential currency volatility. Given the current geopolitical tensions and economic concerns, many are wary of asset classes that may be vulnerable to abrupt changes in market sentiment.
