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Gold Rises Toward $5,000 as Weaker Dollar Adds Impetus to Rally - BLOOMBERG
(Bloomberg) -- Gold closed in on $5,000 an ounce, with geopolitical risks and renewed threats to the Federal Reserve’s independence supporting a record-breaking rally.
Bullion climbed to a record above $4,967 on Friday and was on track for a weekly gain of nearly 8%, supported by a weaker dollar. Silver advanced to an all-time high just below $100 an ounce and platinum also hit a peak, ith a key gauge of the US currency on track for its poorest week in seven months – making precious metals cheaper for most buyers.
“Gold is undergoing a sustained re-rating as cracks appear in the post-World War II rules-based order,” said Yuxuan Tang, head of macro strategy in Asia at J.P. Morgan Private Bank. “Investors increasingly view gold as a reliable protection against these hard-to-quantify regime-shift risks.”
Fresh from its best annual performance since 1979, bullion has extended a breakneck rally to gain a further 15% in the early part of this year. US President Donald Trump’s renewed attacks on the Federal Reserve, as well as military intervention in Venezuela and threats to annex Greenland, have added impetus to the so-called debasement trade, whereby investors pull back from sovereign bonds and currencies in favor of alternative havens like gold.
“Gold supply is just not enough to diversify US market and political tension, which makes price ceilings rather fragile,”said Ahmad Assiri, a strategist at Pepperstone Ltd Group. Goldman Sachs Group Inc. lifted its year-end gold price forecast to $5,400 an ounce from a previous estimate of $4,900, citing intensifying demand from private investors and central banks.
Poland’s central bank, which ranks first in the world in terms of reported purchases of gold, this week approved plans to buy another 150 tons as it braces for more geopolitical instability. Meanwhile, India’s holdings of US Treasuries have fallen to a five-year low as gold and other alternatives take a larger share, joining a broader shift by some major economies out of the world biggest bond market.
Investors are now awaiting Trump’s pick for the next Fed chair after the US president said he has finished interviewing candidates, reiterating that he has someone in mind for the job. A more dovish leader would increase bets on further interest-rate cuts this year — a positive for non-yielding bullion — after three successive reductions.
Markets are also closely watching the outcome of talks between Russian President Vladimir Putin and US envoys Steve Witkoff and Jared Kushner about a proposed peace plan to end the war in Ukraine.
Silver, riding on gold’s rally, has more than tripled over the past year. The white metal has also been boosted by a historic short squeeze and a wave of retail buying that left banks and refiners scrambling to meet unprecedented demand.
Confusion surrounding a Chinese policy update on export licenses has amplified the perception of scarcity, while the market remains exceptionally volatile even after the US refrained from slapping blanket import tariffs on critical minerals including silver and platinum.
Silver’s elevated prices and wild swings also mean banks cannot take the same risks they used to, said Robert Gottlieb, a former precious metals trader. That means banks “need to greatly reduce positions, leading to more volatility and wider spreads,” he said.
Gold rose 0.2% to $4,946.34 an ounce as of 4:07 p.m. in Singapore. Silver jumped 2.5% to $98.62. Platinum edged lower, having earlier hit a record above $2,690, and palladium was also down. The Bloomberg Dollar Spot Index was on track for a weekly decline of 0.8%.
--With assistance from Masaki Kondo and Preeti Soni.
