Gold surged past the US$5,550 level for the first time on record during Thursday's Asian trade, as investors flocked to the precious metal amid geopolitical tensions, economic uncertainty and a weaker United States dollar.
By 4:10 pm AEDT (5:10 am GMT), spot gold prices were trading 2.5% higher at US$5,553.83 per ounce.
Tensions intensified after U.S. President Donald Trump issued a fresh warning to Iran, urging it to “come to the table” to negotiate a “fair and equitable deal” preventing the development of nuclear weapons, or face a far more severe U.S. attack.
Iran responded by threatening retaliation against the U.S., Israel and their allies.
The Federal Reserve’s decision to keep interest rates unchanged also supported gold. The central bank left its benchmark rate in a range of 3.5% to 3.75% following its January policy meeting on Wednesday, maintaining a cautious stance as inflation remains above target.
ANZ analysts commentedi in a note to clients: "The Federal Reserve’s decision to leave interest rates unchanged also failed to dampen investor demand for the precious metal. Traders were instead encouraged by reports that Rick Rieder is a leading candidate to replace Jerome Powell as Fed chair. The Blackrock executive has advocated for lower borrowing costs."
Additional political uncertainty has added to the appeal of gold. Trump said earlier in the week that he would soon announce his choice for the next Fed chair and suggested borrowing costs would fall significantly under new leadership.
Some traders fear that such a shift could erode the central bank’s independence, further lifting demand for traditional safe-haven assets.
