Gold price staged another "sudden drop": after falling back below the 5600 mark, it closed near 5500 US dollars, triggering a market frenzy due to dovish expectations from the Federal Reserve.

Spot gold prices fell after approaching $5600, rising by 1.02% to $5472.41 per ounce at the time of writing, setting a new record high. The strong uptrend in gold prices continues due to market expectations of loose monetary policies, massive capital withdrawal from sovereign bonds, and traditional currency systems. Gold prices surged by 4.6% at one point, marking a significant increase recently, mainly as traders bet on the new monetary policy direction of the Federal Reserve later this year to lean towards more easing. Despite the Fed's decision to keep current interest rates unchanged at the meeting on Wednesday, signals were released that any potential policy adjustments in the future would proceed in a more cautious manner. Analysts point out that Trump may choose Rick Rieder, head of global fixed income business at BlackRock, who openly supported substantial interest rate cuts, as the next Chairman of the Federal Reserve. Bart Melek, global head of commodity strategy at TD Securities, commented that the market has shifted focus from Powell to a more likely dovish successor, with many believing that the next chairman will be significantly more inclined towards loose policies. The ultimate choice for the Fed Chairman will be a key variable in determining the performance of the gold market this year. Rick Rieder of BlackRock has recently become a popular candidate for the position of Fed Chairman. As a veteran on Wall Street, Rieder is seen as bringing a market-centric approach to the Fed. Last September, he advocated for a more aggressive 50 basis point rate cut compared to the Fed's favored 25 basis points, and opposed the Fed's forward guidance on future rate changes, known as the "dot plot." Lower interest rates are favorable for precious metals as they do not pay interest. Furthermore, heightened geopolitical risks, investors fleeing currencies and government bonds, and a weakening dollar have fueled a boom in precious metal investments. Gold prices have risen by about 25% this year, breaking through the $5000 per ounce mark this week, while silver prices have jumped by 63%. On Tuesday, the US dollar index hit a four-year low, marking the largest single-day decline since the implementation of tariff policies last year. Trump had previously stated that the dollar was "doing well" and not overly depreciated, but this sharp drop contrasts with his remarks. It is noteworthy that Trump has now stated that the recent devaluation of the dollar is beneficial for US businesses, a comment that, although consistent with past US government positions, has still triggered significant volatility in the foreign exchange market - the market perceives this statement as essentially acknowledging the recent significant devaluation of the dollar. Market differentiation occurred on Wednesday: after Treasury Secretary Mnuchin reiterated "government support for a strong dollar," the US dollar exchange rate temporarily stabilized, but precious metal prices continued their strong rally, continuing to rise significantly. "While a weak dollar benefits exporters - as the cost for foreign buyers to purchase US-priced assets decreases - it increases inflationary pressure," said Aaron Hill, Chief Analyst at FP Markets, in a report. "The current issue lies in Trump's unpredictability. From threats of imposing tariffs to eyeing Greenland, his actions continue to disrupt the market, prompting investors to reduce holdings of US assets. This exacerbates downward pressure on the dollar and could eventually push up inflation." Market sensitivity also remains high regarding recent turmoil in the Japanese bond market, raising concerns about liquidity risks in the global financial system. Large-scale selling in the Japanese bond market is the latest evidence of concerns over the government's massive fiscal spending, while speculation that the US may intervene to support the yen is putting pressure on the dollar, making precious metals cheaper for most buyers. Expectations of a more dovish Federal Reserve with reduced independence and heightened geopolitical risks, may "drive funds to be allocated more quickly to gold, led mainly by retail investors," said Suki Cooper, director of global commodities research at Standard Chartered Bank, in a report. "Unless a short-term pullback occurs, we still see further upside risk for gold." Spot gold prices are currently on a record-breaking uptrend, with the latest spot gold price at around $5472.41 per ounce, rising by over 4% during the day. Silver prices have increased by 0.58% to $117.70 per ounce. Platinum and palladium prices have also risen. The Bloomberg Dollar Spot Index has risen by 0.4%. Analysts at Deutsche Bank said in a report that in a weakened dollar environment, gold prices could rise to $6000 per ounce this year, as the continued rise in gold prices "reflects ongoing investment motivations: higher reserve allocations and increased investor allocation to non-dollar assets and physical assets." January gold futures on the New York Commodities Exchange (Comex) closed strong on Wednesday (January 28), surging by 4.3% (about $221.70) to settle at $5301.60 per ounce. This increase marks the seventh consecutive trading day of gains for gold, with a cumulative increase of 15.5%, and the largest single-day percentage gain since March 24, 2020. Simultaneously, the precious metals market is experiencing a comprehensive breakout, with January Comex silver futures closing up 7.2% to $113.111 per ounce. This price not only firmly surpasses the $100 mark but also sets the second highest closing point in the history of silver futures.