The price of Gold skyrocketed to reach over 5300 dollar per ounce for first time today as dollar value plunged into four-year low, and hit by lack of customer “confidence.”
The price hike is recorded amid expected decision by US Federal Reserve and political dynamics, according to a report by Reuters.
Spot gold climbed 2.3% to 5,305.65 dollar per ounce after hitting a record high of 5,311.31 dollar. It has gained more than 20% since the start of the year.
U.S. gold futures for February delivery surged 4.3% to 5,301.90 dollar per ounce.
The U.S. dollar was grappling with a “crisis of confidence” as it languished near four-year lows, exacerbating dollar selling, after President Donald Trump said the currency’s value is “great” when asked if he thought it had declined too much.
The weaker dollar pushes oversea buyers to invest more on gold.
“(Gold’s rise) is due to the very strong indirect correlation with the dollar and … Trump’s remark to a casual question about the dollar, which implied that (there is) a broad-based consensus within the White House to have a weaker greenback going forward,” said Kelvin Wong, a senior market analyst at OANDA.
USD Plunges to Four-Year Lows
Trump also said that he will soon announce his pick to serve as head of the Fed, and predicated interest rates would decline once the new chair takes over.
“Given the tension between the Fed’s mandates and the White House, I think the markets are just getting defensive ahead of (Fed Chair Jerome Powell’s remarks later today),” Ilya Spivak, head of global macro at Tastylive said.
The Fed is widely expected to hold rates steady at its January monetary policy meeting, currently underway
Gold, which does not yield interest, typically performs well in a low-interest-rate environment.
Deutsche Bank said on Tuesday that gold could climb to 6000 dollar per ounce in 2026, citing persistent investment demand as central banks and investors increase allocations to non-dollar and tangible assets.
