Gold Breaks $5,300 for the First Time, Dollar Crashes Ahead of Fed
Gold prices continued their sharp rally and broke through $5,300 for the first time on Wednesday (January 28th), driven by a falling US dollar, which plunged to a near four-year low. Spot gold rose 2.3% to $5,305.65 per ounce at 08:32 GMT, after hitting a new record of $5,311.31. Since the start of the year, gold has surged more than 20%.
US gold futures for February delivery also rallied, rising 4.3% to $5,301.90 per ounce. The main driver came from a weaker dollar, making greenback-denominated gold more attractive to buyers outside the US.
The market believes the dollar is experiencing a crisis of confidence, especially after President Donald Trump called the currency "great" when asked if it had fallen too far—a comment that only triggered further dollar selling.
Kelvin Wong, senior analyst at OANDA, believes gold's recent rise is driven by its strong negative correlation with the dollar, coupled with implicit signals that the White House may be more comfortable with a weaker dollar going forward. Trump also said he would soon announce his choice to lead the Fed and predicted interest rates would fall after the new chairman takes office—a narrative that has further fueled market speculation.
On the other hand, the market is also looking increasingly defensive ahead of Fed Chairman Jerome Powell's remarks. Ilya Spivak, head of global macro at Tastylive, said the tension between the Fed's mandate and the White House's interests is leading investors to seek safety before policy direction is fully clear. The Fed itself is widely expected to hold interest rates at its ongoing January meeting. In a low-interest-rate environment, gold—which offers no yield—usually benefits.
In other precious metals, silver rose 1.5% to $114.68 per ounce, after hitting a record $117.69 on Monday, and has surged nearly 60% so far this year.
Platinum rose 2.3% to $2,703.11, while palladium strengthened 2.2% to $1,976.62. Meanwhile, Deutsche Bank said gold has the potential to reach $6,000 per ounce by 2026, citing persistently strong investment demand as central banks and investors increase allocations to non-dollar and tangible assets.
Source: Newsmaker.id
