Gold soars towards $5 600 as Trump rattles sabre over Iran

Gold prices soared to a fresh record near $5 600 on Thursday, while oil rallied after Donald Trump ramped up geopolitical tensions with his threatened military strike on Iran.

The surge in safe-haven precious metals also saw silver hit another peak and has been helped by a softer dollar sparked by speculation that the US president is happy to see the world's reserve currency weaken.

An uneventful policy announcement by the Federal Reserve did little to inspire buying, although observers said traders are optimistic interest rates will come down as Trump prepares to name his pick as the next governor.

Bullion piled on more than $300 at one point to top $5 595 after Trump said Tehran needed to negotiate a deal over its nuclear programme, which the West believes is aimed at making an atomic bomb.

"Hopefully Iran will quickly 'Come to the Table' and negotiate a fair and equitable deal - NO NUCLEAR WEAPONS - one that is good for all parties. Time is running out, it is truly of the essence!" he wrote on his Truth Social platform.

"The next attack will be far worse! Don't make that happen again," he added, referring to US strikes against Iranian targets in June.

A US naval strike group Trump described as an "armada", led by aircraft carrier the USS Abraham Lincoln, is now in Middle East waters, with the president saying it was "ready, willing and able to rapidly fulfill its mission, with speed and violence, if necessary".

CNN said he was mulling an attack after nuclear talks failed to advance.

Iran's foreign minister Abbas Araghchi warned on Wednesday that Tehran would respond immediately and forcefully to any US military operation - adding that its forces have their "fingers on the trigger" - but did not rule out a new nuclear deal.

 'Inverse of confidence'

Stephen Innes said the surge in gold indicated deeper structural concerns.

"After blowing through $5 500 in early Asia, bullion is no longer trading like a commodity. It is trading like a referendum. Not on inflation. Not on rates. On trust," he wrote.

"Gold is the inverse of confidence. When belief in policy coherence weakens, gold ceases to behave like a hedge and instead acts as an alternative. That is what we are watching now. This is not fear of recession. There is doubt about fiat stewardship."

Rising tensions sent oil prices up more than one percent - with WTI at its highest since September and Brent at levels not seen since July - amid supply worries.

AFP