Futures on gold (GC=F) picked up more than 6% through Wednesday’s trading session to notch the precious metal’s best day since March 2009, according to TradeStation data.
The rally in store-of-value stalwart gold adds to a tear upward that has seen the yellow metal nearly double over the past year, picking up more than 97%, as a mix of geopolitical tensions, easing monetary policy from the US Federal Reserve, and an uptick in buying by central banks have all buoyed the metal.
The Fed’s decision to keep rates steady at 3.5% to 3.75% added roughly 2% to gold’s rally.
As the dollar has slid on a wave of vacillating foreign policy from the White House and tensions have risen around the globe, investors have piled into gold, traditionally a flight-to-safety asset. Silver (SI=F), too, has soared, picking up more than 280% over the past year.
In mid-January, commodities strategists at Goldman Sachs set a year-end target for gold at $5,400 per troy ounce. The metal passed that mark on Wednesday.
Saxo Bank head of commodity strategy Ole Hansen noted in a recent client note that gold’s rally may begin to cool, as many of the fears driving its uptick haven’t quite materialized.
“US fiscal debt continues to rise, but market stress has so far been expressed mainly through a steeper yield curve rather than disorderly moves in rates or credit,” Hansen wrote. “The dollar has weakened, but not collapsed, while geopolitical tensions have yet to escalate into disruptions severe enough to derail global growth.”
HSBC chief precious metals analyst James Steel wrote in a client note that if the dollar continues to weaken, gold likely has more room to run, with its next resistance level at $5,500.