Gold recorded a strong rally at the start of the week in Asian markets, breaking to new all time highs, supported by a complex mix of political, geopolitical, and economic factors. The move was driven by escalating unrest in Iran, growing political pressure surrounding the U.S. Federal Reserve, and weaker signals from the U.S. labor market, which renewed momentum in defensive assets.
Spot gold rose nearly 2% to a record level around $4,601 per ounce before stabilizing near $4,574, while U.S. gold futures posted stronger gains, briefly touching $4,612 per ounce. The yellow metal had already closed last week with gains exceeding 4%, largely fueled by increased hedging demand following rising tensions between the United States and Venezuela.
On the geopolitical front, rapid developments in Iran further supported gold prices after reports indicated that more than 500 people were killed during widespread anti government protests. Concerns intensified after warnings from Tehran about the possibility of targeting U.S. military bases in the event of foreign intervention, raising the risk of a broader regional confrontation.
From an economic perspective, U.S. employment data added further support to bullion prices, as December figures showed a clear slowdown in hiring, coming in below market expectations. Despite a slight decline in the unemployment rate, the broader picture suggests fading momentum in the labor market, strengthening market bets that the Federal Reserve could move toward further monetary easing in 2026 an environment that traditionally favors gold over the medium term.
Politically, gold received additional backing from heightened uncertainty in Washington after Federal Reserve Chair Jerome Powell confirmed that the central bank had received legal subpoenas related to his Senate testimony. These developments reignited concerns over the independence of U.S. monetary policy and weighed on the U.S. dollar, increasing gold’s appeal for holders of other currencies and accelerating the rally.
Meanwhile, the U.S. dollar weakened at the start of the week, pulling back from its strongest levels in a month following legal developments involving Powell, which revived tensions between the Federal Reserve and the U.S. administration. The dollar index slipped below the 99 point level, ending a five day winning streak, as investment flows shifted toward gold, which surged to a fresh record amid growing unease over the credibility and independence of U.S. monetary policy.
Although the dollar initially found modest support during early Asian trading after the latest U.S. jobs report reinforced expectations that interest rates would remain unchanged at the upcoming Fed meeting, this support quickly faded as geopolitical risks intensified particularly after reports of hundreds of fatalities during protests in Iran reviving demand for safe haven assets.
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