Gold prices pushed higher during Tuesday's Asian trade, holding above the $5,050 level as investors sought safety amid rising geopolitical risks and uncertainty surrounding the Federal Reserve’s policy outlook.
By 3:30 pm AEDT (4:30 am GMT), spot gold was up 1.3% at $5,074.00 per ounce, marking a fresh leg higher in its recent rally.
Silver also continued its surge, reaching new record highs. The metal jumped 5.3% to $109.12 per ounce.
Safe-haven flows intensified as investors reacted to shifting United States foreign and trade policy signals.
Market participants grew increasingly cautious after President Donald Trump appeared to strain relations with key allies, including in Europe and Canada.
Over the weekend, Trump threatened to impose 100% tariffs on Canadian goods if Ottawa were to pursue a trade agreement with China, reviving fears of a broader trade conflict.
In addition to geopolitical drivers, attention turned to U.S. monetary policy and the leadership of the central bank. Concerns about the Federal Reserve’s independence have surfaced as traders await Trump’s nomination for the next Fed Chair, after the president said he had finished interviewing candidates.
Expectations that a more dovish chair could be selected have fuelled bets on further interest rate cuts this year, a backdrop that tends to favour non-yielding assets such as gold.
Lower interest rates reduce the opportunity cost of holding gold, enhancing its appeal during periods of economic and political uncertainty.
The Federal Reserve’s interest rate decision is due on Wednesday (Thursday AEDT) and is expected to be the week’s key macro event.
The U.S. central bank is widely anticipated to keep its benchmark rate unchanged within the 3.50% to 3.75% target range.
Investors will focus closely on comments from Fed Chair Jerome Powell after the meeting, seeking guidance on the likely trajectory of policy in the months ahead.
