Gold, silver hit record highs as inflation data cements Fed rate cut bets
Gold hit a record high as US inflation data bolstered rate cut expectations, while silver also reached a new peak amid global uncertainties.
- Gold and silver prices surged to new record highs.
- The price increase was driven by U.S. inflation data that was lower than expected, reinforcing investor expectations that the Federal Reserve will cut interest rates.
- Lower interest rates are favorable for gold because it is a non-yielding asset, making it more attractive to investors.
- Ongoing geopolitical tensions and economic uncertainties also contributed to the rally by increasing demand for safe-haven assets.
Gold reached a new record high on Tuesday(January 13), driven by US inflation data that reinforced expectations of Federal Reserve rate cuts this year, along with ongoing geopolitical and economic uncertainties that fueled demand for safe-haven assets.
Silver also reached a fresh peak.
As of 1.31pm ET (1831 GMT), spot gold was holding steady at US$4,591.49 per ounce, following an earlier record high of US$4,634.33.
US gold futures for February settled 0.3% lower at US$4,599.10.
David Meger, Director of Metals Trading at High Ridge Futures, commented, "The slightly positive market sentiment was largely driven by the benign CPI data, which increases the likelihood of future Fed rate cuts."
The US core Consumer Price Index rose by 0.2% month-on-month and 2.6% year-on-year in December, coming in below analyst expectations of 0.3% and 2.7%, respectively.
US President Donald Trump reiterated his call for "meaningful" interest rate cuts following the inflation report.
The Federal Reserve is expected to keep rates unchanged during its meeting from January 27-28, though investors are currently anticipating two rate cuts later this year.
Lower interest rates are generally favourable for gold, as it offers no yield.
Meger noted that geopolitical tensions and concerns about the Fed's independence continue to underpin the safe-haven appeal of gold.
These concerns have intensified after the Trump administration launched a criminal investigation into Fed Chair Jerome Powell, drawing criticism from former Fed officials and global central bankers.
Trump has also threatened to impose a 25% tariff on countries trading with Iran, which could reopen old tensions with Beijing, Iran’s primary partner.
Meanwhile, Russia launched missile and drone strikes on Ukrainian cities overnight.
Commerzbank has raised its year-end gold price forecast for 2026 to US$4,900.
In silver, spot prices rose 2.1% to US$86.74 per ounce, after reaching an all-time high of US$89.10 earlier in the day.
Hugo Pascal, a precious metals trader at InProved, said, "Despite technical indicators pointing to a correction, traders are still favouring bullish options for silver... Investors should be prepared for sharp reversals within this high-volatility environment, even as the broader bullish trend persists."
Spot platinum remained steady at US$2,343.35 per ounce, while palladium rose 1.4% to US$1,868.68 per ounce.
