Gold price surge above $5,500 an ounce on Wednesday in New York after the Federal Reserve held interest rates steady, with a weakening U.S. dollar and expectations of easier policy driving investors toward hard assets as inflation hedges.
Dollar Weakness Accelerates Gold’s Rally
Gold price surge more than four percent to trade above $5,500 per ounce on Wednesday, extending a powerful rally fueled by a sliding U.S. dollar and sustained investor demand for inflation protection. Prices are up more than twenty percent so far this year.
The dollar stabilized Wednesday after falling to its weakest level since early 2022, making gold cheaper for buyers using other currencies. Analysts said the currency move has intensified flows into bullion and other commodities.
“Dollar weakness is supercharging the rise in gold, adding fuel to the fire for the sharp move in precious metals,” said Robin Brooks, a senior fellow at the Brookings Institution. He added that currency depreciation has historically boosted demand for assets perceived as stores of value.
Gold is trading at record levels on COMEX, with heavy volumes reflecting heightened interest from institutional and retail investors alike. Market participants described the rally as broad-based rather than driven by short-term speculation.
Fed Policy Expectations Support Hard Assets
The Federal Reserve on Wednesday concluded its two-day policy meeting by keeping interest rates unchanged, reinforcing market expectations that monetary policy may ease later this year. Those expectations have supported the so-called debasement trade, in which investors seek protection from declining purchasing power.
“Unchecked fiscal debt creation continues to erode confidence in fiat currencies,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note Wednesday. He said gold remains a primary beneficiary when investors question long-term currency stability.
Federal Reserve Chair Jerome Powell sought to downplay concerns that the gold price surge in precious metals signals a loss of confidence in policymakers. He said inflation expectations remain anchored and that the central bank’s credibility is intact.
“If you look at where inflation expectations are, our credibility is right where it needs to be,” Powell said during a post-meeting news conference.
Still, traders said expectations of lower real interest rates make non-yielding assets such as gold more attractive, particularly in an environment of persistent inflation uncertainty.
Strong Demand Lifts Other Precious Metals
Gold’s rally has coincided with strong gains across the precious metals complex, reflecting broad demand for hard assets. Silver surged as high as $116 per ounce Wednesday, up about fifty percent since the start of the year.
Analysts cited robust industrial demand, particularly from China, along with supply constraints tied to export restrictions. Those factors have tightened the market and amplified price moves.
Platinum hovered near record highs Wednesday, up about twenty-nine percent this year, supported by expectations of supply deficits and increased use in automotive and industrial applications.
Copper prices were steady after topping $13,000 per metric ton in London last week, marking the first time the benchmark has reached that level. Strong global demand and constrained supply have supported the red metal, although it lagged precious metals on Wednesday.
Market participants said gold remains the focal point, with investors watching currency trends and central bank signals closely for cues on the rally’s durability.
