Gold surges to record $5,305 as dollar slides to 4-year low
Precious metal extends year-to-date gain beyond 20% as investors seek safe haven ahead of Fed decision
Gold surged to a record $5,305.65 per ounce on Wednesday, extending its year-to-date gain beyond 20% as investors flocked to the traditional safe haven amid a weakening U.S. dollar and heightened global uncertainty. The precious metal touched an intraday high of $5,311.31, with futures climbing 3.61% in early trading.
The rally coincides with the Federal Reserve's decision to hold interest rates steady at a target range of 3.5% to 3.75%, marking a pause in the easing cycle after three consecutive rate cuts in late 2025. The central bank is navigating a complex economic landscape characterized by a softening labor market and inflation that remains above its 2% target, according to CBS News coverage of the January 27-28 meeting.
The U.S. dollar, which has depreciated by approximately 10% against a basket of global currencies in 2025, trades near its lowest level in four years. A weaker greenback makes gold more attractive to international buyers, as it becomes less expensive when purchased in other currencies. The dollar index is forecast to decline another 3-4% against G10 currencies in 2026, according to RBC Capital Markets, with compressing interest rate differentials driving the pressure.
Safe-haven demand has intensified amid heightened geopolitical tensions and policy uncertainty in the United States, according to analysis from ForexCrunch. Both central banks and retail investors are contributing to buying interest, with significant inflows into gold-backed exchange-traded funds supporting the surge.
The precious metal has now gained more than 20% since the beginning of the year, outpacing most traditional asset classes. Gold's advance represents a dramatic turnaround from November 2025, when it closed at $4,222.78 per ounce before reaching approximately $4,560 in December, according to Investopedia data.
Market expectations for additional rate cuts later in 2026 are providing additional support for gold, as lower interest rates reduce the opportunity cost of holding non-yielding bullion. Analysts project gold prices to reach $5,300 to $5,400 by year-end, with some more bullish forecasts suggesting the metal could climb as high as $6,400 or $7,150 amid continued economic uncertainty.
The surge in gold prices comes as investors increasingly seek protection against potential market volatility and inflation risks. The metal's record run underscores its enduring appeal as a store of value during periods of economic transition and geopolitical stress.