Gold Shines Bright Amid Economic Gloom and Geopolitical Tensions

Gold prices increased as U.S. economic data fell short, paired with worrying inflation statistics and rising U.S.-Iran tensions. Despite a Q4 GDP slowdown, gold remains a safe asset amid uncertainty. Traders anticipate U.S. interest rate cuts and expect gold demand to stay robust amidst geopolitical challenges.

Gold prices surged on Friday following U.S. GDP data that lagged behind expectations, with inflation surprising on the upside. Concerns over U.S.-Iran tensions added fuel to investors' gold appetite, pushing spot gold up 0.8% to $5,039.42 an ounce by 09:04 a.m. the same day.

Economic growth in the U.S. decelerated sharply to a 1.4% annualized rate in Q4, overshadowing economist predictions of 3%, dampened by the government shutdown and weakened consumer spending. The Personal Consumption Expenditure index also rose to 0.4% in December, higher than the projected 0.3% increase.

Tai Wong, an independent metals trader, noted that the GDP miss and private credit concerns are supporting gold amid rising inflation. Additionally, U.S. policy considerations and threats concerning Iran's nuclear plan continue to keep gold in demand. Goldman Sachs predicts gold prices might hit $5,400 by the end of 2026.

(With inputs from agencies.)