Gold Tests Historic $5,000 Level
Gold prices are testing the historic $5,000 per ounce level this week as investors seek safe-haven assets amid a weakening U.S. dollar and expectations of continued Federal Reserve rate cuts. As of February 18, gold traded at $4,957 per ounce, up $61 or 1.25% from the previous day, according to Fortune.
The precious metal has gained an astonishing 69% over the past year, climbing from $2,933 per ounce in February 2025 to nearly $5,000 today. Over the past month alone, gold has risen 4.64% from $4,737.
Fed Holds Steady as Dollar Slides
The Federal Reserve held interest rates steady at its January meeting, maintaining the federal funds rate in the 3.5% to 3.75% range after three consecutive cuts at the end of 2025. The central bank has adopted a "wait-and-see" approach, welcoming signs of economic stabilization while remaining cautious about inflation.
However, a rare move by the New York Federal Reserve sent shockwaves through currency markets. The central bank conducted a "rate check" with currency traders on the dollar/yen exchange rate, reportedly at the U.S. Treasury's request. This signaled potential coordinated intervention with Japan's central bank to support the yen.
The result was a dollar selloff, with the greenback falling more than 2.26% over five days against a basket of international currencies. The yen strengthened more than 3% against the dollar during the same period.
Investors Flock to Gold Over Dollar
Macquarie analyst Thierry Wizman noted a significant shift in investor behavior. "Instead of flocking to the USD, traders flock to gold," he observed, as traditional post-World War II currency arrangements appear to be unraveling.
UBS economist Paul Donovan pointed to deteriorating U.S. international standing and domestic events that are "corroding some of the perceived supports of the dollar's reserve status."
Gold's surge reflects this new reality. Prices have soared to all-time highs, up over 25% since the beginning of 2025, fueled by inflation concerns and geopolitical uncertainty.
Central Bank Buying Remains Strong
Central bank demand continues to support gold prices. The People's Bank of China extended its gold purchases for the 15th consecutive month in January, part of a broader trend of sovereign diversification away from dollar-denominated assets.
Central bank gold purchases totaled 863 tonnes in 2025 and are expected to remain robust at approximately 850 tonnes in 2026, according to industry estimates.
Silver and Platinum Also Gain
Other precious metals are riding the same wave. Silver is trading at $77 per ounce, while platinum stands at $1,723 and palladium at $2,070, according to Fortune's latest price data.
Outlook: Analysts See Further Upside
Major financial institutions remain bullish on gold. Goldman Sachs projects gold reaching $4,900 per ounce by the end of 2026, citing continued central bank buying and ETF inflows. Morgan Stanley has revised its forecast to $4,400 per ounce, viewing gold as a key barometer for geopolitical risk.
Markets have priced in a higher probability of three Fed rate cuts this year, up from expectations of just two cuts a week ago. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, creating a favorable environment for the precious metal.
With President Trump expected to announce a replacement for Fed Chair Jerome Powell, whose term expires in May 2026, uncertainty around monetary policy could provide additional tailwinds for gold in the months ahead.
Sources: Fortune, Kitco News, Trading Economics, Macquarie, UBS