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Gold price (XAU/USD) surges to a fresh record high of $5,579 before retreating to around $5,500 in early Asian trading on Thursday. The rally of the precious metal is bolstered by strong safe-haven demand amidst persistent geopolitical tensions, economic uncertainty, and a weaker US Dollar (USD).

Geopolitical tensions persisted after US President Donald Trump issued fresh warning to Iran on Wednesday. Trump urged Iran to “come to the table” and negotiate a “fair and equitable deal” that would prohibit the development of nuclear weapons or the next US attack would be far worse. Meanwhile, Iran responded with a threat to strike back against the US, Israel and those who support them.

The US Federal Reserve's (Fed) decision to keep interest rates steady has contributed to the Gold’s upside. The US central bank kept interest rates steady in the target range of 3.5% to 3.75% following its January policy meeting on Wednesday. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.

Trump said earlier on Tuesday that he will announce his pick for the new Fed Chair soon. He added that interest rates will significantly drop as soon as a new Fed chair is at the helm. Traders worry that the Fed would lose its independence after the appointment of a Trump candidate as Fed Chairman, boosting the safe-haven demand.

On the other hand, profit-taking in the yellow metal cannot be ruled out in the near term after a rise of more than 80% year-on-year. "The gains fuelled by sustained central bank buying, relentless momentum from trend-following funds, and strong flight-to-quality demand," said IG market analyst Tony Sycamore. "Although the parabolic nature of the rally suggests a pullback is not far away, the underlying fundamentals are expected to remain supportive throughout 2026, positioning any dips as attractive buying opportunities."
 

Gold 15-min Chart

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