Gold rose to a record high near $5,000 an ounce, as geopolitical risk and threats to the Federal Reserve's independence added support to a rally fueled by a retreat from currencies and bonds.
Bullion climbed to an all-time above $4,960 in early trading and is on track for a weekly gain of more than 7%, while silver also hit a record. A key gauge of the US currency's strength is down 0.8% so far this week. A weaker dollar makes bullion cheaper for most buyers.
Fresh from its best annual performance since 1979, gold has extended a breakneck rally to gain a further 15% in the early weeks of this year. US President Donald Trump's renewed attacks on the Federal Reserve, as well as geopolitical risk in Venezuela, Iran and Greenland, have added impetus to the so-called debasement trade, whereby investors pull back from sovereign bonds and currencies in favor of alternative havens like gold.
Investors are awaiting Trump's pick for the next Fed chair after the US president said he has finished interviewing candidates, reiterating that he has someone in mind for the job. A more dovish chair would increase bets on further interest-rate cuts this year — a positive for non-yielding bullion — after three successive reductions.
Meanwhile, Goldman Sachs Group Inc. lifted its year-end gold price forecast to $5,400 an ounce from a previous estimate of $4,900, citing intensifying demand from private investors and central banks. Analysts Daan Struyven and Lina Thomas said in a note that risks were “significantly skewed to the upside because private-sector investors may diversify further on lingering global policy uncertainty.”
Gold rose 0.5% to $4,959.39 an ounce as of 8:00 a.m. in Singapore. Silver jumped 0.7% to $96.91. Platinum and palladium rose. The Bloomberg Dollar Spot Index was flat, having ended the previous session down 0.3%.
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