Gold Surpasses $5,500 and Silver Records New All-Time High

SadaNews - Gold prices have surged to an unprecedented record level, exceeding $5,500 per ounce, continuing a sharp upward trend fueled by the weakness of the US dollar and investor aversion to sovereign bonds and currencies.

The precious metal rose by as much as 3.2%, adding to gains of 4.6% in the previous session, marking the largest daily increase since the peak of the COVID-19 pandemic in March 2020.

Precious metals have seen strong gains this year amid escalating geopolitical tensions and concerns regarding the independence of the Federal Reserve, supporting what is known as "currency devaluation trading." Silver also reached a new all-time high on Thursday.

Bets on a More Accommodative Monetary Policy

Traders ignored the widely anticipated decision by the Federal Reserve on Wednesday to keep interest rates unchanged.

With the appointment of a new monetary policy head to succeed Jerome Powell later this year, Rick Ryder from BlackRock, known for advocating a more aggressive rate cut, has emerged as a prominent candidate.

This has driven traders to increase their bets on a shift to accommodative monetary policy, which benefits non-yielding precious metals.

Bart Melek, head of global commodity strategy at TD Securities, stated, "People are looking beyond Powell and thinking that the next chair could be more clearly in favor of easing." He added: "The choice of the Federal Reserve chair will be a critical factor for gold's performance this year."

Dollar and Debt Pressures Support the Rise

Last week’s sharp sell-off in the Japanese bond market was the latest indicator of concerns about significant financial spending, while speculations about US intervention to support the yen pressured the dollar, making precious metals cheaper for most buyers. As demand for gold has increased, its prices have risen by more than 25% since the beginning of the year, while the gains for silver were even greater, around 65%.

This week, US President Donald Trump stated that he was not worried about the dollar's decline, which has fallen to its weakest levels in nearly four years, before Treasury Secretary Scott Pesen later confirmed the administration's support for a stronger currency, ruling out intervention to sell dollars for yen.

Geopolitical Tensions Increase Demand for Safe Havens

White House actions, including threats to annex Greenland and military intervention in Venezuela, have confused markets in recent weeks.

Trump also warned Iran on Wednesday of facing military strikes if a nuclear deal is not reached, and in recent days threatened South Korea and Canada with additional tariffs.

How Hong, chief investment officer at Lotus Asset Management, stated: "Gold and silver are the ultimate safe havens in the face of extreme risks as geopolitical disruptions continue." He added: "Gold is the anchor of all valuations; as long as it continues to rise, the rest of the precious metals will follow suit."

Silver Records Significant Jumps

Silver rose by as much as 2.3% to record a new high above $119.40 per ounce, marking its sixth consecutive daily gain. This sharp rise prompted CME Group to raise margin requirements on silver futures contracts on COMEX as of Wednesday's market close.

In China, where prices exceeded global levels, the only silver focus fund specializing in direct investment suspended the acceptance of new investors, while local authorities in Shenzhen formed a task force to oversee operations of a gold trading platform.

As of 9:05 AM Singapore time, gold rose 1.1% to $5,477.36 per ounce, after previously touching a record level of $5,588.71.

Silver increased by 0.7% to $117.47 per ounce, while platinum and palladium prices dipped slightly. The Bloomberg Dollar Spot Index fell by 0.1% on Thursday and about 1.3% over the week.