Gold extended its blistering rally on Wednesday, surging past the $5,200 mark for the first time, as the US dollar sank to a near four-year low amid growing investor unease over US economic prospects and currency policy.
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Spot gold rose 1.1% to $5,243.58 per ounce by 0314 GMT, after hitting a record high of $5,247.21 earlier in the session. Prices are up more than 20% since the start of the year. On Tuesday alone, gold had jumped more than 3%. US gold futures for February delivery climbed 3.1% to $5,237.70 per ounce.
Analysts said the surge was driven primarily by the sharp decline in the dollar. “Gold’s rise is due to the very strong indirect correlation with the dollar,” said Kelvin Wong, senior market analyst at OANDA. He added that the rally accelerated during the US trading session after President Donald Trump’s remarks suggested a broad-based acceptance within the White House of a weaker dollar.
The US dollar continued to struggle near four-year lows, weighed down by what analysts described as a growing “crisis of confidence”. Trump brushed off concerns over the currency’s weakness, saying its value was “great” when asked if it had fallen too much.
Further pressuring the dollar, US consumer confidence fell in January to its lowest level in more than 11-and-a-half years, reflecting rising anxiety over a sluggish labour market and persistently high prices.
Trump also said he would soon announce his nominee to lead the Federal Reserve, predicting interest rates would fall once the new chair takes office. The Fed is widely expected to keep rates unchanged at its January policy meeting currently under way.
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Wong said near-term resistance for gold could emerge around $5,240 an ounce. Meanwhile, Deutsche Bank said on Tuesday that gold could rise to $6,000 per ounce in 2026, citing sustained investment demand as central banks and investors increase allocations to non-dollar assets.
Spot silver gained 1.9% to $115.11 an ounce, after hitting a record high of $117.69 earlier this week. Silver has surged nearly 60% so far this year.