Gold prices extended gains during Asian trading on Wednesday, hovering just below the record high reached in the previous session. The rally was driven by stable U.S. inflation data, which reinforced expectations that the Federal Reserve will cut interest rates later this year, alongside escalating geopolitical tensions in Iran that boosted demand for safe-haven assets.
Spot gold rose 0.7% to USD 4,623.55 per ounce at 22:19 ET (03:19 GMT), after touching an all-time high of USD 4,634.33 per ounce on Tuesday. U.S. gold futures for March delivery gained 0.6% to USD 4,627.10 per ounce.
Gold’s upward momentum reflects growing investor demand for defensive assets as markets reassess the U.S. monetary policy outlook and respond to rising geopolitical risks in the Middle East.
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Other precious metals also posted strong gains. Silver prices surged 3%, reaching a new record high of USD 90.04 per ounce. Strong industrial demand combined with safe-haven inflows provided additional momentum for silver’s rally.
Platinum prices rose sharply as well, climbing 4% to USD 2,415.21 per ounce, approaching the record high set last month. The synchronized advance across precious metals highlights a broader shift of capital into defensive assets amid heightened global uncertainty.
U.S. consumer price index (CPI) data released on Tuesday served as a key catalyst for gold’s rally. Core CPI rose 0.2% month-on-month in December and 2.6% year-on-year, both below market expectations.
The data suggest that inflationary pressures in the U.S. continue to ease, providing the Federal Reserve with greater room to consider interest rate cuts in the coming period. Markets are currently pricing in around two rate cuts in 2026, with some investors viewing the risks as skewed toward the possibility of a third cut.
According to analysts at ING, two Fed rate cuts appear “entirely plausible,” particularly as the U.S. labor market shows clearer signs of cooling. Lower interest rates typically support non-yielding assets such as gold by reducing their opportunity cost.
Beyond monetary policy factors, geopolitical risks remain a key pillar supporting gold prices. Iran is facing escalating anti-government protests, with reports indicating that approximately 2,000 people have been killed, raising concerns over broader instability across the Middle East.
The situation has prompted warnings from the United States. President Donald Trump has cautioned about the possibility of military action and threatened to impose 25% tariffs on countries maintaining business ties with Iran.
Trump has also urged protesters to intensify pressure on Iran’s leadership, posting messages on social media with forceful language that has further heightened uncertainty in the region.
These developments have reinforced demand for gold as a traditional safe-haven asset during periods of geopolitical turmoil.
Gold has also received support from growing concerns over the independence of the U.S. central bank. The Trump administration recently launched a criminal investigation involving Federal Reserve Chair Jerome Powell, raising alarms about potential political pressure on the Fed.
While the move unsettled investors in the short term, several central bank officials and senior executives at major financial institutions publicly expressed support for Powell, emphasizing the importance of safeguarding the Fed’s independence in conducting monetary policy.
Nevertheless, even the perception of diminished central bank independence has been enough to encourage investors to increase gold holdings as a hedge against institutional and policy-related risks.
In the short term, analysts expect gold prices to continue fluctuating near record highs as markets await clearer signals from the Federal Reserve and further developments in the Middle East.
From a medium-term perspective, if U.S. inflation remains stable or continues to ease while economic growth shows signs of slowing, the likelihood of a shift toward monetary easing will become increasingly pronounced. Such an environment is widely viewed as supportive of gold maintaining elevated price levels.
However, experts caution that technical pullbacks are likely after the metal’s sharp recent gains. Despite this, underlying fundamentals—including accommodative monetary policy expectations, persistent geopolitical risks, and sustained demand for portfolio hedging—are expected to continue underpinning gold’s longer-term bullish outlook.
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