Gold has surged back above the psychologically critical $5,000 per ounce level, extending a sharp rebound after a volatile start to the month. The recovery comes as investors reassess the Federal Reserve’s interest-rate trajectory, digest stronger-than-expected U.S. economic data, and monitor geopolitical tensions in the Middle East. With liquidity thinned by Lunar New Year market closures across parts of Asia, price swings have been amplified, underscoring how sensitive bullion remains to macro signals.

Fed Caution Clouds Rate-Cut Narrative

The minutes from the Federal Reserve’s January 27–28 meeting revealed policymakers were more hesitant about cutting rates than many investors had anticipated. That tone has complicated expectations for monetary easing in 2026, especially as President Donald Trump continues to advocate for lower borrowing costs. His nominee for Fed chair, Kevin Warsh, could face a delicate balancing act between political pressure and central bank credibility.

For gold, the implications are nuanced. Lower rates typically support non-yielding assets like bullion by reducing the opportunity cost of holding them. However, if the Fed delays cuts amid resilient economic data, real yields could remain elevated, tempering enthusiasm for further gains. Markets are now recalibrating their expectations, weighing the probability of policy easing against persistent inflation risks.

The uncertainty surrounding the Fed’s independence has also become a structural driver for bullion. In recent years, investors have increasingly viewed gold as a hedge not only against inflation, but also against institutional and currency risk.

Dollar Strength and Economic Resilience

The U.S. dollar firmed after economic data signaled ongoing momentum in the American economy. Industrial production posted its strongest gain in nearly a year, while core capital goods orders rose more than expected in December. The Bloomberg Dollar Spot Index advanced 0.5% on Wednesday before stabilizing, reflecting renewed confidence in U.S. growth prospects.

A stronger dollar typically pressures gold, as it makes the metal more expensive for non-U.S. buyers. Yet bullion’s ability to climb despite currency headwinds suggests that underlying demand remains robust. Spot gold rose around 0.8% to $5,017.88 per ounce in Singapore trading, while silver gained 2.5%, with platinum and palladium also advancing.

The recent rebound follows a dramatic correction earlier this month, when gold plunged from a record above $5,595 amid speculative unwinding. The choppy trading environment highlights the role of leveraged positioning and momentum-driven flows in magnifying volatility.

Geopolitical Risks Reinforce Safe-Haven Appeal

Beyond monetary policy, geopolitical developments continue to shape sentiment. Nuclear talks between the U.S. and Iran have so far yielded limited progress, with further negotiations expected in two weeks. Reports suggesting that any potential U.S. military operation could evolve into a prolonged campaign have injected fresh uncertainty into energy and financial markets.

Historically, periods of geopolitical strain have bolstered gold’s appeal as a safe haven. Banks including BNP Paribas, Deutsche Bank, and Goldman Sachs maintain constructive outlooks, citing enduring drivers such as geopolitical fragmentation, concerns over sovereign debt sustainability, and diversification away from fiat currencies.

Looking ahead, the interplay between Fed policy, dollar strength, and geopolitical dynamics will determine whether gold can sustain its footing above $5,000. Investors in both Israel and the U.S. are likely to watch upcoming inflation data and central bank commentary closely, as shifts in rate expectations could quickly redefine the metal’s trajectory in what remains an unusually fluid macro landscape.