Gold prices surged to an all-time high on Thursday, breaking above the $5,500 level for the first time on record, as investors piled into safe-haven assets amid escalating geopolitical tensions, policy uncertainty, and a weaker US dollar.

Spot gold (XAU/USD) climbed to a fresh peak of $5,579 before easing back toward $5,500 during early Asian trading. The precious metal’s rally has been underpinned by strong risk-aversion flows as global investors seek protection against rising political and economic uncertainty.

Geopolitical risks remain front and centre after US President Donald Trump issued a renewed warning to Iran, urging the country to negotiate a new nuclear agreement. Trump warned that failure to reach a deal would result in a far more severe US response. Iran quickly pushed back, threatening retaliation against the US, Israel, and their allies, adding to already fragile market sentiment.

Gold’s upside has also been supported by the US Federal Reserve’s decision to hold interest rates steady at 3.5%–3.75% following its January policy meeting. While the Fed struck a cautious tone, expectations that monetary policy will eventually ease continue to benefit non-yielding assets such as gold, as lower rates reduce the opportunity cost of holding bullion.

Adding to market unease, Trump said he would soon announce his choice for the next Federal Reserve Chair and claimed interest rates would “fall sharply” once a new chair is in place. These remarks have raised concerns about the future independence of the central bank, further boosting demand for gold as a hedge against policy risk.

Despite the powerful rally, some analysts caution that short-term profit-taking may emerge after gold’s dramatic rise of more than 80% year-on-year. However, underlying fundamentals remain firmly supportive.

“The gains have been driven by sustained central-bank buying, strong momentum from trend-following funds, and persistent flight-to-quality demand,” said IG market analyst Tony Sycamore. “While the parabolic nature of the move suggests a pullback could occur, the broader backdrop remains bullish, with any dips likely to attract buyers through 2026.”

With geopolitical tensions unresolved and confidence in monetary policy independence under scrutiny, gold’s historic surge underscores its enduring role as the ultimate safe-haven asset in times of uncertainty.

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.