Gold prices climbed to a record high on Tuesday after softer US inflation data strengthened expectations of Federal Reserve interest rate cuts later this year, while ongoing geopolitical and economic uncertainties boosted demand for safe-haven assets. Silver also surged to a fresh all-time high.
Spot gold rose 0.4 per cent to US$4,609.69 per ounce as of 11:21 a.m. ET (1621 GMT), after touching a record intraday high of US$4,634.33 earlier in the session. US gold futures for February delivery gained 0.1 per cent to US$4,617.90.
David Meger, director of metals trading at High Ridge Futures, said market sentiment turned mildly positive following benign US inflation data, which increased the likelihood of future Federal Reserve rate cuts.
US core Consumer Price Index (CPI) rose 0.2 per cent month-on-month and 2.6 per cent year-on-year in December, below market expectations of 0.3 per cent and 2.7 per cent, respectively.
Following the data release, former US President Donald Trump reiterated calls for a significant reduction in interest rates.
While the Federal Reserve is widely expected to keep rates unchanged at its Jan 27–28 policy meeting, investors are currently pricing in two rate cuts this year. Lower interest rates typically support non-yielding assets such as gold.
Meger added that broader fundamental factors, including geopolitical tensions and concerns over the Federal Reserve’s independence, continued to underpin gold’s safe-haven appeal.
Concerns intensified after the Trump administration initiated a criminal investigation into Fed Chair Jerome Powell, prompting criticism from former central bank leaders and global policymakers.
Trump has also threatened to impose a 25 per cent tariff on countries trading with Iran, raising fears of renewed tensions with China, Iran’s largest trading partner.
Meanwhile, Russia launched missile and drone strikes on cities across Ukraine overnight, adding to geopolitical risks.
In response to the strong rally, Commerzbank raised its 2026 year-end gold price forecast to US$4,900 per ounce.
Separately, CME Group announced on Monday that it would adjust margin requirements for precious metals to manage heightened market volatility.
Silver prices also posted strong gains, with spot silver jumping 4.7 per cent to US$88.90 per ounce after hitting a record high of US$89.10 earlier in the session.
Hugo Pascal, a precious metals trader at InProved, cautioned that while technical indicators point to the risk of a correction, traders remain bullish through options positioning. He warned investors to brace for sharp counter-moves in an increasingly volatile market, even as the broader upward trend remains intact.
Elsewhere, spot platinum edged up 0.1 per cent to US$2,344.84 per ounce, while palladium rose 1.5 per cent to US$1,870 per ounce.
