TLDR
- Gold climbed back above $5,000 an ounce after a 2% jump on Wednesday
- Fed minutes showed officials were wary of cutting rates at their January meeting
- The dollar held gains following strong US economic data, including a rise in industrial production
- Banks like Goldman Sachs, BNP Paribas, and Deutsche Bank forecast gold will resume its upward trend
- US-Iran nuclear talks remain inconclusive, adding to geopolitical uncertainty supporting gold prices
Gold climbs back above $5,000 as Fed rate signals and geopolitical risks weigh on markets
Gold has moved back above $5,000 an ounce, recovering ground after a turbulent stretch that followed a sharp sell-off at the start of February.
Spot gold rose 0.9% to around $5,019 during Asian trading on Thursday. US gold futures gained 0.6% to $5,037.75.
The metal had jumped 2.1% on Wednesday, recovering most of what it lost earlier in the week. Trading was thin on Thursday with several Asian markets closed for Lunar New Year.
The recent drop pulled gold back from an all-time high above $5,595. Markets have been choppy since that peak.
Fed Minutes Dampen Rate Cut Hopes
The Federal Reserve released minutes from its January 27-28 meeting on Wednesday. Officials appeared more cautious about cutting interest rates than many traders expected.
That stance could put the Fed on a collision course with President Donald Trump. Trump has publicly backed lower borrowing costs, and his nominee for Fed chair is Kevin Warsh.
Lower interest rates tend to benefit gold, which pays no yield. When rates stay higher, gold becomes less attractive compared to interest-bearing assets.
The dollar held its gains on Thursday after rising Wednesday. Strong US economic data helped support it, including a jump in industrial production — the largest monthly increase in nearly a year.
Orders for core capital goods also came in above expectations in December. The Bloomberg Dollar Spot Index rose 0.5% on Wednesday before holding flat Thursday.
Major Banks Still Bullish on Gold
BNP Paribas, Deutsche Bank, and Goldman Sachs have all forecast that gold will resume its upward trend. They point to ongoing concerns about the Fed’s independence and a broader move away from sovereign currencies and bonds.
Geopolitical tensions have also kept demand for gold elevated. Traders are watching nuclear talks between the US and Iran closely.
Negotiations took place in Geneva this week but ended without a deal. A US official said Iran’s representatives would return in two weeks with detailed proposals.
US-based outlet Axios reported that any potential US military operation against Iran would likely last several weeks. No such operation has been confirmed.
Silver also moved higher on Thursday, rising 2.5% to $79.16 an ounce. Platinum and palladium both gained as well.
As of Thursday afternoon Singapore time, spot gold was trading at $5,017.88 an ounce.
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