Gold ounce exceeds $5200.. Silver records near $114 an ounce

SadaNews - Gold recorded a new record level exceeding $5200 per ounce, continuing a rapid upward trend fueled by losses in the US dollar, and investors fleeing from sovereign bonds and currencies.

The precious metal rose by up to 1.3% on Wednesday, after jumping 3.4% in the previous session, marking its largest daily gain since April.

US President Donald Trump stated that he is not concerned about the decline in the dollar's value, which has driven the world's reserve currency to its weakest level in nearly four years.

Flight from the dollar and bonds supports precious metals

This decline, along with rising geopolitical risks and investors fleeing from currencies and US Treasury bonds, has triggered a wave of investment demand for precious metals.

Gold has risen more than 20% since the beginning of the year, surpassing the $5000 per ounce level for the first time this week. During the same period, silver has jumped over 50%.

The sharp sell-off in the Japanese bond market is the latest example of concerns related to heavy financial spending, while speculation about the possibility of US intervention to support the Japanese yen weighed on the dollar, making precious metals cheaper for most buyers.

The index measuring the performance of the US currency fell by 1.1% on Tuesday, marking its largest daily drop since April.

Trump downplays the dollar's decline

Trump told reporters in Iowa on Tuesday that the dollar "is performing great," and that he expects fluctuations in currency values. In response to a question about whether he was concerned about currency losses, he said, "No, I think it’s great."

Trump's administration actions, including the threat to annex Greenland, military intervention in Venezuela, along with renewed attacks on the Federal Reserve's independence, have contributed to market turmoil in recent weeks.

The US President threatened to raise tariffs on South Korean goods and impose 100% tariffs on Canada if Ottawa reached a trade agreement with China.

Bets on a more dovish Fed

Meanwhile, bond traders are ramping up their bets on a more dovish shift in the Federal Reserve's policy, against the backdrop of expectations that Rick Rieder, BlackRock's Chief Investment Officer, will succeed Jerome Powell as Fed Chairman.

The Wall Street veteran has called for a more aggressive approach to cutting borrowing costs. The environment of low interest rates favors precious metals that do not yield a return.

Suki Cooper, global head of commodity research at Standard Chartered, wrote in a note that expectations of a more dovish Federal Reserve and less independence, along with geopolitical risks, "are likely to accelerate investment allocations to gold, led by individual investors." She added, "Unless there are short-term corrections, we still see additional upside risks."

Metal and dollar prices

Gold rose by 1.1% to $5234.64 per ounce by 12:15 PM in Singapore, after earlier touching a peak of $5202.51.

Silver rose by 2.5% to $114.92. Platinum and palladium also increased, while the Bloomberg Dollar Spot Index rose by 0.3% on Wednesday, but remained down 1.3% since the beginning of the week.