Gold prices surged to fresh record highs during Friday's Asian trade, extending a powerful rally as geopolitical tensions and uncertainty over the future direction of United States monetary policy fuelled demand for the safe-haven metal.
By 4 pm AEDT (5 am GMT) spot gold was up 0.4% to trade at fresh record highs of US$4,957.05 per ounce, putting it on track for a weekly gain of more than 7%.
Analysts pointed to a combination of monetary policy expectations and currency moves underpinning the rally.
ANZ analysts said: "Gold climbed to a fresh high on expectations of further monetary easing and a weaker USD. Sentiment was boosted by better-than-expected U.S. economic data.
"The U.S. economy expanded in the third quarter slightly more than previously reported. However, it was a smaller rise in jobless claims and a solid rise in personal spending which triggered a selloff in the USD.
"This helped increase investor appetite for the precious metal, which offset a fall in haven buying as geopolitical tensions eased."
Safe-haven demand has been supported by elevated geopolitical risks, including tensions involving Venezuela, Iran and Greenland, as well as renewed concerns over the U.S. Federal Reserve’s independence.
Investors are also closely watching developments around Greenland, after U.S. President Donald Trump said he would step back from imposing tariffs on European nations opposing his ambitions over the Arctic island.
Trump added that the United States and the North Atlantic Treaty Organization had formed the framework of a future deal with respect to Greenland, a development that could temper some haven demand if tensions continue to ease.
Further adding to market uncertainty is speculation around Trump’s choice for the next Federal Reserve chair to succeed Jerome Powell.
A more dovish appointment could reinforce expectations for additional interest-rate cuts later this year, a backdrop that would likely support gold prices by reducing the opportunity cost of holding the non-yielding metal.
