Gold futures soared past $5,500 per ounce on Wednesday, buoyed by the Federal Reserve’s decision to maintain interest rates and a weakening dollar that has led investors toward hard assets. The greenback has recently stabilized after experiencing its lowest valuation since early 2022, a decline that President Trump dismissed during a visit to Iowa, emphasizing that he believes the situation is beneficial rather than problematic.
Year-to-date, gold prices have surged more than 20% as the dollar depreciated against other currencies. Robin Brooks, a senior fellow at the Brookings Institution, noted that the Dollar’s weakness is “supercharging the rise in gold,” essentially driving demand for precious metals.
The anticipation of a more accommodating Fed policy is also contributing to this trend, where investors seek to safeguard their purchasing power amid concerns over the value of fiat currencies. Ole Hansen, head of commodity strategy at Saxo Bank, remarked that unchecked fiscal debt is diminishing confidence in traditional currencies. Additionally, speculation is mounting regarding who the next Fed chair could be, with Rick Rieder of BlackRock being a possible candidate favored for aggressive rate cuts.
In the aftermath of the Federal Reserve’s policy meeting, Chair Jerome Powell indicated that rising investments in precious metals do not necessarily reflect a lack of control over inflation or a loss of institutional credibility. He reassured, “If you look at where inflation expectations — our credibility is right where it needs to be.”
Geopolitical factors are also amplifying the demand for gold, as tensions rise with President Trump announcing a “massive Armada” headed toward Iran, further inflating market uncertainty. In terms of other metals, silver prices experienced significant hikes, reaching as high as $116 per ounce on Wednesday, primarily driven by strong demand from China and trade restrictions. Platinum hovered near record highs, enjoying a 29% increase, while copper prices remained steady after recently surpassing $13,000 in London.
This dynamic in the commodities market illustrates a notable shift as investors increasingly turn toward tangible assets amidst concerns over economic policies and international tensions.