Bullion prices consistently set new all-time highs above $5,500 supported by strong demand for safe-haven assets amid ongoing geopolitical tensions, economic uncertainty and a weakening US dollar.
At 9 am, gold prices were at $5,474, up 1.03% since the early morning opening after hitting a high of $5,604 during Thursday's early Asian session.
Global geopolitical tensions continued to escalate after US President Donald Trump issued a fresh warning to Iran on Wednesday, urging Tehran to return to the negotiating table to reach a fair and equitable deal to prevent the development of nuclear weapons.
Trump warned that failure to do so would trigger stronger US military action. Iran then responded with threats of retaliatory strikes against the US, Israel and allies that support them, raising market concerns about the risk of a larger-scale conflict.
In market developments, the US Federal Reserve's (Fed) decision to keep interest rates in their target range of 3.5% to 3.75% after its January policy meeting has supported gold prices.
A stable and potentially lower interest rate environment reduces the opportunity cost of holding non-yielding assets such as gold, thus increasing the attractiveness of the precious metal among investors.
Trump also previously stated that he would announce a new Fed Chair candidate in the near future, while expecting a significant interest rate cut once the new leadership takes office.
This statement has sparked concerns that the Fed may lose its independence, thus driving increased demand for safe-haven assets including gold.
However, short-term profit-taking cannot be ruled out following the more than 80% year-on-year surge in gold prices. According to IG market analyst Tony Sycamore, the rise was driven by continued central bank purchases, strong momentum from trend-following funds and high demand for quality assets.
While the parabolic upward movement suggests a potential correction, strong fundamentals are expected to continue to support the market throughout 2026, thus making any price decline an attractive buying opportunity.
