Gold prices soared to a record high on Wednesday, with silver following closely behind. Investors rushed toward these safe-haven assets amid growing geopolitical and economic uncertainties. Expectations of interest rate cuts from the Federal Reserve added further fuel to the rally.
Record-Breaking Prices
Spot gold jumped 0.9% to reach $4,628.68 per ounce by 1:38 p.m. ET. Earlier in the day, it touched a record peak of $4,641.40. U.S. gold futures for February delivery settled 0.8% higher at $4,635.70.
Alex Ebkarian, COO at Allegiance Gold, observed the strong momentum. "All roads are leading to gold and silver," he said. Ebkarian pointed to demand from diverse buyers and noted the market is in a structural bull phase.
Geopolitical Tensions Fuel Demand
Several global events contributed to the uncertainty driving investors toward gold. Iran issued warnings to neighbors hosting U.S. troops, threatening to strike American bases if Washington intervenes in the country's protests. Meanwhile, Danish and Greenlandic ministers prepared to meet U.S. Vice President JD Vance after President Donald Trump renewed demands for U.S. control of Greenland.
Gold typically performs well during periods of low interest rates and heightened uncertainty. Since it does not yield interest, lower rates make it more attractive compared to interest-bearing assets.
Economic Data and Fed Expectations
Recent economic data added to the complex picture. U.S. retail sales for November rose above expectations. Producer Price Index (PPI) figures met monthly forecasts but exceeded annual estimates. This followed weaker-than-expected December core CPI numbers released on Tuesday.
Despite these mixed signals, traders continued to anticipate two interest rate cuts from the Federal Reserve this year. Concerns about Fed independence persisted after central bank chiefs worldwide expressed support for Fed Chair Jerome Powell. This came in response to threats of a criminal indictment from the Trump administration.
Silver and Other Metals Follow
Spot silver surged 5.2% to $91.46 per ounce after reaching a record high of $92.23. Ebkarian shared his outlook for silver, anticipating some volatility but maintaining a bullish stance. "I see silver at $100 as no different than at $90," he said. "Our short-term forecast is between $100 to $144."
Ebkarian added that metals are likely to maintain their upward trend through the first quarter of the year.
Other precious metals also gained ground. Spot platinum climbed 2.4% to $2,379.68 per ounce. Palladium rose 1.3% to $1,862.96 per ounce.
The combination of geopolitical tensions, economic data, and Federal Reserve expectations created perfect conditions for precious metals to shine. Investors clearly sought safety in gold and silver as uncertainties mounted on multiple fronts.
