Global gold prices have shattered records, breaching the $4,600 per troy ounce mark for the first time ever. This dramatic surge, which also saw silver skyrocket, was triggered by a potent mix of political uncertainty surrounding the US Federal Reserve and escalating geopolitical tensions, particularly in Iran.
Fed Investigation and Dollar Weakness Fuel Rally
The primary catalyst for Monday's historic price jump was news that US prosecutors have launched a criminal investigation into Federal Reserve Chair Jerome Powell. The probe relates to his testimony last summer concerning the central bank's building renovation project. This development has reignited deep-seated market fears about the potential erosion of the Fed's cherished independence from political influence.
Alex Kuptsikevich, chief market analyst at FxPro, noted that the US dollar index suffered its worst fall in three weeks due to concerns that the White House could undermine the Fed's autonomy. "This risk stands in striking contrast with the current expectations of just two rate cuts by the end of 2026," he stated. The dollar index fell 0.4% to 98.75, making dollar-denominated gold cheaper for holders of other currencies and boosting its appeal.
In midmorning European trading on Monday, gold futures in New York soared 2.2% to $4,600.50 an ounce, after touching an intraday peak of $4,612.70. Analysts point out that gold is increasingly being viewed as a reliable alternative to traditional fiat currencies like the US dollar, especially amid rising public debt and perceived pressure on central banks.
Geopolitical Tensions Amplify Safe-Haven Demand
Concurrently, rising geopolitical instability provided a powerful secondary boost to precious metals. Continuing protests in Iran and the recent US capture of Venezuelan leader Nicolas Maduro have reinforced gold's traditional role as a safe-haven asset during times of global uncertainty.
The situation in Iran appears particularly volatile. According to US officials, President Trump is scheduled to be briefed on Tuesday on various response options to Tehran, which could include sanctions, cyber weapons, and even military strikes. This looming threat has prompted investors to seek the security of hard assets.
The rally was not confined to gold. Silver prices surged an astonishing 6.1% to $84.22 an ounce, having earlier hit a record high of $84.69 during the session. This indicates a broad-based rush into precious metals.
Sustaining the Rally: What Investors Are Watching
The latest record-breaking gains build upon a strong performance for gold throughout the previous year, which was underpinned by interest-rate cuts in the US, robust central-bank buying, and strong inflows into gold-backed exchange-traded funds (ETFs).
Looking ahead, the market's focus is shifting to upcoming US economic data and policy signals. Investors are keenly watching for clues on whether the current momentum can be sustained. The key questions revolve around the depth of the Fed probe, the evolution of Middle Eastern tensions, and the broader trajectory of the US dollar and interest rates.
For Indian investors and consumers, this global surge has direct implications, influencing domestic gold prices and investment strategies in one of the world's largest markets for the precious metal. The interplay between international haven demand and local factors will be critical to watch in the coming days.
