Gold Climbs To Record High Above $5,300 As Dollar Slips

Gold prices rose above $5,300 per ounce for the first time on Wednesday as weakening confidence in the US dollar and concerns around the independence of the US Federal Reserve boosted demand for the safe-haven metal.

Spot gold jumped 1.3 per cent to $5,255.95 an ounce by 11:31 GMT after scaling a record $5,311.31. Prices gained more than 3 per cent in the previous session. US gold futures for February delivery jumped by 3.3 per cent to $5,250 an ounce.

"Gold is rising not merely due to market anxiety, but also because confidence in the global monetary-fiscal order is shifting toward a more cautious stance," said Linh Tran, senior market analyst at XS.

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The US dollar struggled near four-year lows on Wednesday after President Donald Trump brushed off its recent weakness, making dollar-priced bullion more attractive to overseas buyers.

Trump also said that he will soon announce his pick to serve as head of the Fed and predicted that interest rates would decline once the new chair takes over.

"The truth is that any one of the candidates that will be proposed will probably be less resistant than Powell to Trump's demands, which falls into gold's favour," said WisdomTree commodities strategist Nitesh Shah.

Gold, which does not yield interest, typically performs well when interest rates are low. The Fed is widely expected to hold rates steady at its January monetary policy meeting, currently under way. The metal has gained more than 20% since the start of the year, building on last year's record gains. Analysts at Deutsche Bank say that gold could climb to $6,000 an ounce this year, citing persistent investment demand. Retail demand in Shanghai and Hong Kong has also been brisk despite the record prices.

"On the jewellery side, I think the prices will soften demand, but I think the high prices may, at the moment, be assisting a little bit of speculative investment from the retail side," Shah added.

Spot silver fell 1.1% to $111.74 an ounce after hitting a record high of $117.69 on Monday. It has gained nearly 60% so far this year.

Spot platinum was down 0.6% at $2,624.31 an ounce, having hit a record $2,918.80 on Monday, while palladium gained 0.6% to $1,944.71.

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