The price of gold continues to see new record levels as it is aided by the growing tensions in the Middle East and the political pressure being put on the US Federal Reserve as the US labor market appears to slow.
Spot gold prices recorded an abrupt rise of 2.4% to trade around $4,619 per ounce, as it hit an historic high of just above $4,620 per ounce. The US gold futures prices even recorded an abrupt rise of nearly 3% to $4,629 per ounce. Despite the abrupt rise, the gold futures prices are still up by over 4% this past week.
The increased price of gold can be attributed to the classic flight-to-safety phenomenon. The turmoil in Iran, the question about US central bank’s indepence, and the less-than-expected economic data in the US contribute towards the uncertainty, which makes the asset an attractive investment tool as an alternative to the US dollar.
Iran unrest fuels safe-haven demand
The Iranian nation has been one of the key drivers that have been pushing the markets to higher levels of late. There have been reports of protests in Iran, which had resulted in over 500 deaths, and the situation got worse when Iran threatened to attack the U.S. military bases in case of an intervention by the United States government as a consequence of the protests.
President Trump was quoted Sunday as saying the situation is being “closely” reviewed, and that “very strong options” were being looked at. These types of reports heightened the fear for war in the region, sending market participants to seek shelter in assets that would typically be sought after during times of turmoil.
Other events further deteriorated the geopolitical tensions. The United Nations has called for an emergency meeting in light of allegations against Russia, which launched a new ballistic missile in a massive attack in Ukraine.
Fed probe rattles the markets
Gold price increases also received support from the political uncertainties prevailing in Washington. The US Department of Justice issued grand jury subpoenas to the Federal Reserve, and this means that the Fed is facing the possibility of being indicted, which is connected to the testimony given by the Fed’s head, Jerome Powell.
Now, however, Powell has vindicated these, as they are about his previous testimonies before the Senate regarding the upgrade of the Fed’s headquarters building to the tune of $2.5 billion, which has come under severe criticism from President Trump. The markets are taking all these with great caution, as some analysts suggest that this could impinge upon the independence of the Fed.
This has also affected the U.S. dollar, leading it to fall to around 99 on the list of the dollar index. As the value of the U.S. dollar decreases, the value of gold increases, as it becomes cheaper to purchase with other forms of currency.
Weaker US Jobs Data Boosts Momentum
The economic figures also contributed to the upsurge. In the past week, the non-farm payrolls in the US only went up by 50,000 jobs in December, a relatively low figure compared to the forecast of 66,000 jobs, although the level of unemployment eased slightly to 4.4%. The meager jobs growth heightened fears over the cooling labor market.
Dealers are also betting more that the Federal Reserve will reduce its monetary policy in 2026. This is because when interest rates are kept lower, the cost of holding non-yielding assets like gold declines, thereby increasing its price.
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Silver, platinum, and copper prices are also up
This positive outlook was also reflected in the markets of precious metals. The prices of silver increased by over 7% to record an historical mark above $85 per ounce. The prices of platinum increased by nearly 4% to remain around $2,379 per ounce, just above its historical mark.
Copper prices were very strong as well. London copper broke the $13,280 mark per ton, came very close to setting a new record price the previous week. US copper is also at a new high.
The same trend was also noticed in the Indian market. Gold futures with an expiration date of February, trading on the Multi Commodity Exchange, touched an all-time high of Rs 1,41,250 per 10 grams, and silver futures touched an all-time high of Rs 2.64 lakh per kilo.
Outlook: Gold remains in the picture amidst uncertainties.
This is as per analysts, who highlight the fact that gold has been driven by the intersection of the three risks associated with geopolitical tensions, the fear of interference, and complexity on the macros fronts. This will provide impetus to safe-haven demand.
With markets in a tizzy and the public doubting the effectiveness of institutions, resorting to gold to hedge uncertainty could hardly have seemed more alluring.
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