WASHINGTON (dpa-AFX) - After closing nearly unchanged yesterday, gold prices catapulted to a new record high on Wednesday as concerns rise that the U.S.-Iran conflict could develop to a full-blown war in the Middle East, triggering investors to accumulate safe-haven metals.
Front Month Comex Gold for January delivery skyrocketed by $221.70 (or 4.36%) to $5,301.60 per troy ounce. Notably, this is a new record closing high for gold prices, which have increased for seven consecutive sessions.
Front Month Comex Silver for January delivery also skyrocketed by $7.5880 (or 7.19%) to $113.111 per troy ounce.
U.S. President Donald Trump announced via Truth Social that 'a massive Armada' is heading towards Iran with readiness to use violence if necessary. Trump suggested Iran come to negotiations regarding its nuclear program and warned that a U.S. attack this time will be far worse than 2025 strikes.
However, Iran's Foreign Minister Abbas Araghchi yesterday stated that diplomacy cannot be achieved through threat.
Iran had already announced that it was fully prepared to counter the U.S. strikes and deliver a 'regret-inducing response' and warned its neighbors that if their 'soil, sky, or waters' are used by the U.S., they would be considered hostile to Iran and face retaliation.
Lebanon's Hezbollah and Yemen's Houthi militant groups have pledged support to Iran. Saudi Arabia has stated that it would not allow its territory to be used for an attack against Iran.
For months, the U.S. had been warning Iran not to go ahead with its nuclear program, while Iran did not respond favorably.
Recently, Trump asked the Iranian government to not use violence against civilians who were protesting against the ruling regime in Iran since late December 2025.
However, when reports from several human rights agencies indicated that Iran had executed thousands of innocents who participated and supported the uprising, Trump deployed a large-scale naval force to Iran last week.
With the threat of war looming large, tension has gripped the Middle Eastern region.
On the monetary front, at the conclusion of the U.S. Federal Reserve's two-day meeting today, the Fed will announce its decision on interest rates. Investors are focused on gaining insights from the Fed on its analysis of the economy and not keenly anticipating an interest rate cut.
Traders are betting on a 97.2% chance that the Fed would retain the current rate in today's meeting, according to CME Group's FedWatch Tool.
On the economic front, this week's U.S. Mortgage Bankers Association's data revealed that the Purchase Index decreased to 193.30 points in the week ended January 23 from 194.10 points in the previous week.
Investors flock to pile gold during geopolitical turmoil due to its safe-haven value. In recent months, silver is tracking gold, with both metals recently hitting new record highs.
Yesterday, Trump announced an increase in tariffs on South Korean imports to 25%. South Korea is seeking urgent talks with the U.S.
A report from the Center for Strategic and International Studies revealed that around 1.2 million Russian troops have been killed, wounded, or gone missing since the Russia-Ukraine war began four years before.
Last weekend, negotiators from Russia and Ukraine held discussions in Abu Dhabi with the U.S. foreseeing the talks with no significant breakthrough though Trump struck an optimistic note stating that 'very good things are happening.'
In an important development, India and the European Union have agreed on a 'landmark' Free-Trade Agreement. India's Prime Minister Narendra Modi called this a 'mother of all deals.' Talks between the two sides began in 2022 but dragged on due to 'mutually sensitive' issues that have now been cleared.
Amid the prevailing global trade uncertainty, this FTA represents around 25% of global GDP. So far, Trump has not commented on the agreement.
The U.S. dollar index was last seen trading at 96.48, up by 0.27 (or 0.28%) today.
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