Gold soars past $5,500 as Trump sabre rattles over Iran

An uneventful policy announcement by the Federal Reserve did little to inspire buying, though observers said traders are optimistic that interest rates will come down this year as Trump prepares to name his pick as the next governor.

Bullion piled on more than $300 at one point to top out at $5,588.71 after the president said Tehran needed to negotiate a deal over its nuclear programme, which the West believes is aimed at making an atomic bomb.

"Hopefully Iran will quickly 'Come to the Table' and negotiate a fair and equitable deal -- NO NUCLEAR WEAPONS -- one that is good for all parties. Time is running out, it is truly of the essence!" he wrote on his Truth Social platform.

"The next attack will be far worse! Don't make that happen again," he added, referring to American strikes against Iranian targets in June.

A US naval strike group that Trump described as an "armada" led by aircraft carrier the USS Abraham Lincoln is now lurking in Middle East waters, with the president saying it was "ready, willing and able to rapidly fulfill its mission, with speed and violence, if necessary".

CNN reported that he was mulling an attack after nuclear talks failed to advance.

Iran's foreign minister Abbas Araghchi warned Wednesday its forces would respond immediately and forcefully to any US military operation -- adding that its forces have their "fingers on the trigger" -- but did not rule out a new nuclear deal.

- 'Inverse of confidence' -

Stephen Innes said the surge in gold indicated deeper structural concerns.

"After blowing through $5,500 in early Asia, bullion is no longer trading like a commodity. It is trading like a referendum. Not on inflation. Not on rates. On trust," he wrote.

"Gold is the inverse of confidence. When belief in policy coherence weakens, gold ceases to behave like a hedge and instead acts as an alternative. That is what we are watching now. This is not fear of recession. There is doubt about fiat stewardship."

The rising tensions pushed oil prices up -- with WTI at its highest since September and Brent at levels not seen since August -- amid worries about supplies from the crude-rich region.

Equity markets were down. Tokyo, Hong Kong, Shanghai, Sydney and Seoul led losses.

Jakarta tanked eight percent, extending Wednesday's collapse that came after index compiler MSCI called on regulators to look into ownership concerns and said it would hold off adding Indonesian stocks to its indexes or increasing their weighting.

The dollar remained under pressure against its peers, even after Treasury Secretary Bessent told CNBC that "the US always has a strong dollar policy", a day after Trump appeared to welcome its recent weakness by saying it was "doing great".

The Fed's latest policy meeting ended with little surprises as boss Jerome Powell said officials were keeping tabs on data.

But Matthias Scheiber and Rushabh Amin at Allspring Global Investments said attention was now on who Trump would tap to take the helm when Powell steps down in May.

"The big focus will remain on the announcement of the new Fed chair, with the race wide open though a general expectation of someone more dovish to succeed Jerome Powell," they wrote in a commentary. 

"Governmental pressure on the Fed to cut interest rates will remain a continued theme this year."

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.2 percent at 53,274.71 (break)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 27,764.65

Shanghai - Composite: DOWN 0.2 percent at 4,144.25

West Texas Intermediate: UP 0.9 percent at $63.79 per barrel

Brent North Sea Crude: UP 0.8 percent at $68.95 per barrel

Dollar/yen: DOWN at 153.30 yen from 153.38 yen on Wednesday

Euro/dollar: UP at $1.1957 from $1.1944

Pound/dollar: UP at $1.3799 from $1.3797

Euro/pound: UP at 86.66 pence from 86.56 pence

New York - Dow: FLAT at 49,015.60 (close)

London - FTSE 100: DOWN 0.5 percent at 10,154.43 (close)

dan/lb