Gold pushed deeper into uncharted territory on Thursday, extending its historic rally above the $5,500 per ounce mark as investors sought safety amid a weakening US dollar, policy uncertainty, and escalating geopolitical tensions.
The precious metal touched a fresh all-time high after momentum accelerated in global markets, driven largely by sustained pressure on the US dollar. The greenback slid to four-year lows after President Donald Trump downplayed concerns over its decline, signaling apparent tolerance for currency weakness even as his administration continues to float new tariff threats.
Further, renewed criticism of the Federal Reserve’s independence further unsettled currency markets, adding to gold’s appeal as a hedge against monetary instability.
Market attention also turned to the Federal Reserve’s latest policy decision. As widely expected, the Fed left interest rates unchanged, citing resilient economic activity and early signs of stabilization in the labor market.
However, policymakers acknowledged that inflation remains elevated and that the overall economic outlook is increasingly uncertain. Notably, two Federal Open Market Committee members dissented in favor of an immediate rate cut, reinforcing market expectations that monetary easing could begin later this year an outlook that traditionally supports gold prices.
Beyond monetary policy, geopolitical risks continued to play a significant role in bolstering bullion demand. Tensions in the Middle East intensified after US officials warned of potential military action against Iran. Statements indicating that a large US naval force in the region is prepared to respond “with speed and violence, if necessary” heightened investor caution, prompting a renewed flight toward safe-haven assets.
The structural factors have also supported the rally of gold. The fear of the widening of fiscal deficits in large economies has been building the argument in favor of hard assets, and the purchasing by central banks has ensured a constant demand. Besides this, there have been continued inflows in gold-backed exchange-traded funds, which is an indicator of robust institutional and retail investor interest in the rally.
As the dollar becomes softer, geopolitical tension increases, and expectations mount that monetary ease will eventually arrive, the trend in gold appears unlikely to decelerate.
While volatility remains a possibility at record price levels, the metal continues to benefit from a powerful combination of economic uncertainty and strategic demand, reinforcing its status as a cornerstone defensive asset in global portfolios.
