Gold prices surged to a record $4,904.66/ounce on Jan 22, driven by geopolitical tensions, a weaker US dollar, and expectations that the US Federal Reserve will reduce interest rates. This price jump marks a historic milestone, with gold seeing significant momentum from both private investors and central banks.

Spot gold reached an all-time high of $4,904.66/ounce at 12:50 PM EST (17:50 GMT), while US Gold Futures for February delivery increased by 1.2%, settling at $4,896.20/ounce.

The weakening of the dollar by 0.4% made gold more appealing to international buyers, adding to the precious metal's momentum. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, cited geopolitical tensions, the weakening dollar, and expectations that the Federal Reserve will ease monetary policy as major factors boosting gold’s appeal.

Trump's foreign policy actions, including a deal with NATO on Greenland, were also part of the geopolitical landscape affecting market sentiment.

In addition, silver prices rose by 3.5% to $96.45, nearing a record high of $96.51. Platinum surged almost 4%, reaching $2,580.10, while palladium rose 2.9% to $1,892.55.

Goldman Sachs increases gold target to $5,400

Goldman Sachs has raised its 2026 price target for gold to $5,400/ounce, up from its previous forecast of $4,900, citing growing demand from private investors.

In a recent analysis, Daan Struyven and his team highlighted that central banks around the world are continuing to accumulate gold at an accelerated pace, with purchases expected to average 60 tonnes per month this year. This demand, combined with expectations that the Fed will reduce interest rates, is making gold increasingly attractive to both institutional and retail investors.

Goldman Sachs also pointed out that as central banks continue buying gold, it’s pushing the market into a competition for limited gold supplies between central banks and private investors, driving gold prices upward.

The Bloomberg Dollar Spot Index, a measure of the dollar's strength, also fell 0.3%, further enhancing gold's appeal.

Gold's potential surge continues to be driven by both central bank purchases and retail investor interest, particularly through ETF funds, which could fuel gold’s climb to new heights by year-end.

In addition to the geopolitical factors, the continued weakness of the dollar and a low-interest-rate environment are expected to support the ongoing upward trend for gold prices throughout 2026.

Gold is not only benefiting from central banks' purchasing activity but is also likely to be more attractive as the Fed’s interest rates decline, making gold ETFs increasingly popular.

Source: Agencies