BY COMFORT OGBONNA
Gold prices surged to unprecedented levels on Wednesday, breaking through the $5,200 mark for the first time as a sharp slide in the U.S. dollar and lingering geopolitical tensions drove investors toward safe-haven assets ahead of a closely watched Federal Reserve policy decision.
Spot gold climbed 1.1% to $5,243.58 per ounce by 0314 GMT, after touching an all-time high of $5,247.21 earlier in the session. The precious metal has now gained more than 20% since the start of the year, building on a strong rally after rising over 3% in the previous session. U.S. gold futures for February delivery also posted solid gains, jumping 3.1% to $5,237.70 per ounce.
Market analysts attributed the rally largely to the weakening dollar, which has fallen to near four-year lows and is facing what some describe as a growing crisis of confidence. Kelvin Wong, a senior market analyst at OANDA, said gold’s move reflects its strong inverse relationship with the U.S. currency. He noted that the latest surge followed remarks by President Donald Trump, who suggested broad support within the White House for a weaker dollar when responding to a casual question about the currency.
The dollar’s decline has been intensified by investor unease over the U.S. economic outlook. Data released this week showed U.S. consumer confidence sinking to its lowest level in more than 11-1/2 years in January, underscoring concerns about a slowing labor market and persistently high prices. These worries have added to selling pressure on the greenback, boosting demand for gold as a hedge against economic and political uncertainty.
Further influencing sentiment, Trump said he would soon announce his nominee to lead the U.S. central bank and predicted that interest rates would fall once a new chair takes office. For now, the Federal Reserve is widely expected to keep interest rates unchanged at its January policy meeting, which is currently underway, but investors are closely monitoring signals for the future policy path.
Wong said gold may face near-term technical resistance around $5,240 per ounce, though broader momentum remains firmly bullish. Adding to the optimistic outlook, Deutsche Bank said on Tuesday that gold prices could rise as high as $6,000 per ounce by 2026, citing sustained investment demand as central banks and investors continue to increase exposure to non-dollar and tangible assets.
The rally in gold has spilled over into other precious metals. Spot silver jumped 1.9% to $115.11 an ounce, after reaching a record $117.69 earlier in the week, and has already soared nearly 60% so far this year. Platinum gained 2% to $2,692.60 per ounce, after hitting a record high of $2,918.80 on Monday, while palladium rose 1.4% to $1,961.68.
With currency weakness, shifting monetary policy expectations and global uncertainty all converging, analysts say precious metals are likely to remain in focus as investors reassess risk and seek protection against volatility.
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