Precious metals markets witnessed an unprecedented historical shift during trading on Tuesday, with gold prices surpassing $4,700 an ounce for the first time ever, driven by a wave of global anxiety and investors seeking safe havens. This record surge comes as a direct response to escalating geopolitical and economic tensions triggered by recent actions by US President Donald Trump.
In detail, spot gold jumped 0.7% to $4,699.93 an ounce by 05:14 GMT, after hitting a record high of $4,701.23 earlier in the session. U.S. gold futures for February delivery also climbed 2.4% to $4,706.50 an ounce. Silver was not far behind, trading near its all-time highs despite a slight decline of 0.4% to settle at $94.27 an ounce.
Geopolitical tensions and trade war fears
Analysts attribute this surge in demand for gold to the prevailing uncertainty in global markets. President Trump's threats to impose additional tariffs on European allies have revived fears of a global trade war that could harm economic growth. The situation has been exacerbated by Trump's escalating efforts to wrest sovereignty over Greenland from NATO member Denmark, prompting the European Union to threaten countermeasures, thus creating an ideal environment for safe-haven assets to flourish.
In this context, Tim Waterer, chief market analyst at KCM Trade, pointed out that the US president's "confusing" political approach, coupled with his stated desire to lower interest rates, directly benefits precious metals. He emphasized that Trump's second term has been a powerful driver for gold, which has risen by more than 70% since he took office a year ago.
The Federal Reserve's independence crisis and monetary policy
Another equally important factor supporting gold's rise is the growing concern over the independence of the Federal Reserve (the US central bank). Markets are awaiting the US Supreme Court's decision this week on a case concerning President Trump's attempt to remove Federal Reserve Chair Lisa Cook. Investors believe that any infringement on the central bank's independence could lead to erratic monetary policies, thus enhancing gold's appeal as a hedge against inflation and financial instability.
Despite Trump's pressure to cut interest rates, forecasts indicate that the Federal Reserve will keep rates unchanged at its meeting scheduled for January 27-28. However, Kelvin Wong, senior market analyst at OANDA, believes the rate-cutting cycle will continue until 2026 due to a slowing labor market and weak consumer confidence—a scenario that supports gold, which typically thrives in low-interest-rate environments.
As for other metals, performances varied, with platinum falling 0.8% to $2,355.60 an ounce in spot trading, and palladium declining 0.7% to $1,828.58, confirming that investment liquidity is mainly focused on gold and silver as key hedging tools at this critical stage.
