Gold prices have surged to unprecedented levels, reaching a record high above $US5200 an ounce. This rally is largely attributed to the weakening US dollar and a general flight from both sovereign bonds and various currencies. Bullion experienced a substantial increase on Wednesday, climbing as much as 1.3 per cent, adding to the impressive 3.4 per cent jump from the previous session, which marked its most significant single-day gain since April.
The decline in the dollar’s value, exacerbated by heightened geopolitical risks, has spurred a considerable shift towards precious metals as a safe haven for investors. Since the beginning of the year, gold has appreciated by more than 20 per cent, breaching the $US5000 mark for the first time ever this week. Silver has seen even more dramatic gains, surging by over 50 per cent during the same period.
Concerns regarding heavy fiscal spending are evident in the massive selloff observed in the Japanese bond market. There is also speculation that potential US intervention to support the yen has further weakened the dollar. This makes precious metals more affordable for buyers holding other currencies. The US currency gauge fell 1.1 per cent on Tuesday, the biggest single-day drop since April.
Adding to market uncertainty, the Trump administration’s actions, including threats of tariffs on South Korean goods and potential levies on Canada, have unsettled investors. As of 12:15 p.m. in Singapore, gold was trading at $US5234.64 an ounce, reflecting a further increase of 1.1 per cent.
