NEW YORK: Gold hit a record high on Tuesday, as US inflation data cemented bets on Federal Reserve rate cuts this year and persistent geopolitical and economic uncertainties drove safe-haven demand, while silver also hit a fresh peak.
Spot gold gained 0.4 percent to USD4,609.69 per ounce as of 11:21 a.m. ET (1621 GMT), following a record high of USD4,634.33 earlier in the session. US gold futures for February delivery rose 0.1 percent to USD4,617.90.
“The reason for the slightly positive tone across the board in the markets was the benign CPI data (which) portends a higher likelihood of Fed rate cuts in the future,” said David Meger, director of metals trading at High Ridge Futures.
The US core Consumer Price Index rose 0.2 percent month-on-month and 2.6 percent year-on-year in December, falling short of analysts’ expectations of 0.3 percent and 2.7 percent, respectively. Trump reiterated his push to cut interest rates “meaningfully” after the inflation data.
The Fed is expected to keep rates steady at its January 27-28 meeting, though investors currently anticipate two interest rate cuts this year. Lower interest rates tend to be favourable for non-yielding bullion.
Fundamental factors like geopolitical tensions and questions over Fed independence continue to support safe-haven gold, said Meger.
Concerns over Fed independence grew after the Trump administration opened a criminal investigation into Fed Chair Jerome Powell, drawing criticism from former Fed chiefs and global central bankers.
Trump has also threatened to slap a 25 percent tariff on countries trading with Iran, risking reopening old wounds with Beijing, Tehran’s top partner. Elsewhere, Russia struck cities across Ukraine with missiles and drones overnight.
Commerzbank raised its 2026 year-end gold forecast to USD4,900.
Meanwhile, CME Group said on Monday it will adjust margin setting for precious metals to address market volatility.
Elsewhere, spot silver gained 4.7 percent to USD88.90 per ounce after hitting an all-time high of USD89.10 earlier in the session.
“Despite technical indicators screaming correction, traders continue to favor bullish options (for silver)… Investors should prepare for sharp countermoves within this high-volatility environment, even as the broader bullish bias remains intact,” said Hugo Pascal, a precious metals trader at InProved.
Spot platinum rose 0.1 percent to USD2,344.84 per ounce and palladium rose 1.5 percent to USD1,870 per ounce.
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