Gold prices extended strong gains on Wednesday, climbing more than 3 percent as the U.S. dollar slipped to a near four-year low amid geopolitical concerns and ahead of the U.S. Federal Reserve’s policy decision.
Spot gold rose 0.6 percent to $5,219.97 per ounce by 0153 GMT, after touching a fresh record high of $5,224.95 earlier in the session. The precious metal has now gained over 20 percent since the beginning of the year, reflecting strong investor demand. Meanwhile, U.S. gold futures for February delivery surged 2.6 percent to $5,216.80 per ounce.
Market analysts largely attributed the rally to continued weakness in the U.S. dollar. Kelvin Wong, senior market analyst at OANDA, said gold’s sharp rise highlights its strong inverse relationship with the greenback. He noted that comments by President Donald Trump on the dollar signalled a preference within the White House for a weaker currency.
The dollar is currently facing what analysts describe as a crisis of confidence, hovering near four-year lows. Selling pressure intensified after Trump remarked that the dollar’s value is “great” when questioned about its recent decline.
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Adding to uncertainty, U.S. consumer confidence fell to its lowest level in more than 11 and a half years in January, driven by fears of a weakening labour market and persistently high inflation. Trump also said he would soon announce his nominee for Federal Reserve chair, predicting interest rates would fall under new leadership.
The Federal Reserve is widely expected to keep interest rates unchanged at its January meeting. Wong said near-term resistance for gold may emerge around $5,240 per ounce. Separately, Deutsche Bank forecast gold could reach $6,000 per ounce in 2026 due to sustained investment demand.
Other precious metals also advanced. Spot silver rose 0.6 percent to $113.63 per ounce, platinum gained 1.5 percent to $2,679.15, while palladium edged up 0.9 percent to $1,951.93.
