Gold (GC=F) futures jumped above $5,400 per ounce on Wednesday as the Federal Reserve held interest rates steady, while a weaker dollar fueled the debasement trade and pushed investors away from fiat currencies and government bonds.

The greenback stabilized on Wednesday after sliding to its lowest level since early 2022, as President Trump shrugged off concerns about a weakening currency. A weaker dollar has helped drive the price of bullion higher in January, extending year-to-date gains to 20%.

"Dollar weakness is supercharging the rise in gold ... adding fuel to the fire for the crazy rise in precious metals," said Robin Brooks, senior fellow at the Brookings Institution.

Read more: How to invest in gold in 4 steps

Expectations of easier Fed policy may also be contributing to the debasement trade, in which investors buy hard assets to protect purchasing power from eroding fiat currencies.

"Unchecked fiscal debt creation continues to erode confidence in fiat currencies," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note on Wednesday.

Hansen also pointed to growing odds on Polymarket that President Trump’s next pick for Fed chair could be Rick Rieder, BlackRock’s head of global fixed income, who favors aggressive rate cuts.

The Federal Reserve kept interest rates steady Wednesday at the conclusion of its two-day policy meeting.

During the press conference after the decision, Powell insinuated the run on precious metals does not mean the markets believe that policy makers have lost control of inflation or institutional credibility.

"If you look at where inflation expectations — our credibility is right where it needs to be," he said.

Read more: Live coverage of the Federal Reserve meeting

Geopolitical tensions are helping drive the bullion rally, with central banks maintaining strong demand while reducing exposure to government bonds.

On Wednesday, President Trump said a “massive Armada is headed to Iran,” threatening military action unless Tehran agrees to negotiate.

"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," Trump wrote on Truth Social.

Elsewhere in the metals space, silver (SI=F) jumped as high as $116 per ounce Wednesday. The metal has surged roughly 50% since the start of the year in a fast rally. Strong demand from China and restrictions on silver exports have also helped lift prices.

Meanwhile, platinum (PL=F) hovered near record highs Wednesday, gaining 29%. Copper (HC=F) prices were steady after topping $13,000 for the first time in London last week.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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