Gold reached a record high Monday as lower-than-expected U.S. inflation data increased expectations of Federal Reserve interest rate cuts this year, while geopolitical concerns boosted demand for safe-haven assets. Silver also hit a new all-time high.
Spot gold steadied at $4,591.49 per ounce by 1:31 p.m. Eastern time after earlier rising to a record $4,634.33. U.S. gold futures for February delivery fell 0.3% to settle at $4,599.10.
“The reason for the slightly positive tone across the board in the markets was the benign CPI data (which) portends a higher likelihood of Fed rate cuts in the future,” said David Meger, director of metals trading at High Ridge Futures.
The U.S. core Consumer Price Index rose 0.2% month over month and 2.6% year over year in December, below analyst expectations of 0.3% and 2.7%, respectively.
President Donald Trump reiterated calls to cut interest rates “meaningfully” following the inflation report.
The Federal Reserve is expected to keep rates unchanged at its Jan. 27–28 meeting. However, investors widely anticipate two rate cuts later this year. Lower rates can support non-yielding assets like gold.
Meger said geopolitical risks and questions over Federal Reserve independence remain key drivers for gold demand.
Concerns over central bank independence increased after the Trump administration opened a criminal investigation into Federal Reserve Chair Jerome Powell. The move drew criticism from former Fed officials and international central bankers.
Trump also threatened to impose a 25% tariff on countries trading with Iran, raising potential tensions with China, a key Iranian trade partner. Separately, Russian forces struck multiple Ukrainian cities overnight with missiles and drones.
The CME Group announced Monday it will adjust margins for precious metals to respond to continued market volatility.
Spot silver rose 2.1% to $86.74 per ounce after climbing to a record $89.10 earlier in the session.
“Despite technical indicators screaming correction, traders continue to favor bullish options (for silver)… Investors should prepare for sharp countermoves within this high-volatility environment, even as the broader bullish bias remains intact,” said Hugo Pascal, a trader at InProved.
Spot platinum was unchanged at $2,343.35 per ounce, while palladium gained 1.4% to $1,868.68.
