Gold Surges 0.6% on Iran Tensions, Inflation

The yellow metal's sharp mid-week rally, overturning earlier losses, was primarily driven by geopolitical anxieties, with U.S. President Donald Trump's warning to Iran underscoring potential military action. ING analysts stated the underlying outlook for gold remains constructive, citing geopolitical risks, expectations of lower interest rates later in 2026, and continued investor and central-bank demand.

However, a firmer U.S. dollar and hawkish signals from Federal Reserve minutes, indicating tempered expectations for imminent rate cuts, constrained gold's ascent. The core personal consumption expenditures (PCE) price index rose 0.4% monthly and 3.0% year-on-year in December 2025, exceeding the Fed's 2% target, while preliminary fourth-quarter U.S. GDP growth came in at 1.4%, below the 2.8% consensus.