Gold prices rose sharply during Wednesday’s trading, hitting fresh record highs amid a broad-based decline in the US dollar against most major currencies ahead of the interest rate decision, as markets also digested the Federal Reserve’s policy outcome.

The move came alongside a renewed escalation in geopolitical tensions after US President Donald Trump ordered an additional naval fleet toward Iran, urging Tehran to reach a nuclear agreement with Washington and warning that any forthcoming military strike would be far more severe than the previous one.

In line with market expectations, the Federal Open Market Committee voted to keep the benchmark interest rate unchanged within a range of 3.5% to 3.75%. The decision marked a pause after three consecutive quarter-point rate cuts, which had previously been described as precautionary steps aimed at insulating the economy from a potential deterioration in the labor market.

Alongside the rate decision, the committee upgraded its assessment of economic growth and expressed less concern about labor market risks relative to inflation risks. In its post-meeting statement, the Fed said that available indicators suggest economic activity continues to expand at a solid pace. Job gains remain subdued, while the unemployment rate has shown signs of stabilization. Inflation, however, remains somewhat elevated.

A notable shift in the statement was the removal of language that had previously indicated risks to the labor market outweighed risks from inflation. This change signaled a more patient stance on monetary policy, reflecting a view that the Federal Reserve’s dual objectives of price stability and maximum employment are now more balanced.

Federal Reserve Chair Jerome Powell said there was no evidence to support the notion that global investors are hedging against dollar-related risks, and he dismissed speculation about the possibility of rate hikes instead of cuts in the near term.

Powell added that current interest rate levels are appropriate to support progress toward the Fed’s goals of full employment and lower inflation, while acknowledging that inflation remains elevated and that demand for labor has cooled noticeably.

Separately, the US dollar index rose by 0.2% by 20:53 GMT to 96.3 points, after touching a high of 96.7 and a low of 95.8 earlier in the session.

The dollar rebounded from earlier losses following comments from US Treasury Secretary Bessent, who said the United States does not intend to intervene in the yen’s exchange rate.

In trading, spot gold surged by 5.6% at 20:55 GMT to $5,368.4 per ounce.

The Canadian dollar rose against most major currencies during Wednesday’s trading, supported by the central bank’s monetary policy statement.

The Bank of Canada decided today to keep the overnight interest rate unchanged at 2.25%, while maintaining the lending rate at 2.5% and the deposit rate at 2.20%, in a move reflecting its continued cautious stance amid a globally uncertain economic environment.

The bank said that the outlook for the global and Canadian economies has not changed materially from the projections in the October Monetary Policy Report, though risks remain elevated due to unpredictable US trade policies and ongoing geopolitical developments.

The bank noted that economic growth in the United States continues to exceed expectations and is likely to remain strong, driven by AI-related investment and consumer spending. While tariffs are contributing to higher US inflation, their impact is expected to fade gradually later in the year. In the euro area, growth has been supported by activity in the services sector, with additional fiscal support expected, while China’s GDP growth is projected to slow gradually as domestic demand weakens, despite strong exports. Overall, the bank expects global growth to average around 3% over the forecast horizon.

On financial markets, the bank said global financial conditions remain broadly accommodative. Recent weakness in the US dollar has helped lift the Canadian dollar above 72 US cents, close to the level seen around the October report. Oil prices have also been volatile due to geopolitical events and are expected to be slightly lower in the period ahead compared with the assumptions in the previous report.

Domestically, US trade restrictions and elevated uncertainty continue to weigh on growth. After a strong performance in the third quarter, GDP growth is likely to have stalled in the fourth quarter. Exports remain under pressure from US tariffs, while domestic demand is showing signs of improvement. Although employment has increased in recent months, the unemployment rate remains elevated at 6.8%, with only a small share of firms indicating plans to hire additional workers.

The bank expects economic growth to remain modest in the near term as population growth slows and Canada adjusts to US protectionist policies. Consumer spending is likely to remain resilient, while business investment is expected to improve gradually, partly supported by fiscal policy. The economy is forecast to grow by 1.1% in 2026 and 1.5% in 2027, broadly in line with the October projections. The review of the Canada–US–Mexico Agreement remains a key source of uncertainty.

On inflation, the consumer price index rose to 2.4% in December, driven by base effects related to the GST/HST tax holiday last winter. Excluding tax-related changes, inflation has continued to slow since September. The bank’s preferred core inflation measures declined from 3% in October to around 2.25% in December. Inflation averaged 2.1% in 2025, and the bank expects it to remain close to the 2% target over the projection period, with trade-related cost pressures offset by excess supply.

The Bank of Canada reiterated that monetary policy remains focused on keeping inflation close to 2% while supporting the economy through this period of structural adjustment. The Governing Council sees the current policy rate as appropriate, provided the economy evolves broadly in line with today’s projections. However, the bank stressed that uncertainty remains high and that it is closely monitoring risks, reaffirming its readiness to act if the economic outlook changes and its commitment to maintaining Canadians’ confidence in price stability amid ongoing global disruptions.

In trading, the Canadian dollar rose against the US dollar at 20:51 GMT, gaining 1% to 0.7367.

The Federal Reserve announced in an emergency decision on Thursday that it would keep the interest rate unchanged at 3.75%, a move that was broadly in line with market expectations.

Elevated spot metal prices suggest that 2026 could be one of the strongest profit years in recent memory for diversified mining companies, with Rio Tinto and Glencore emerging as the leading beneficiaries, according to a report from Bloomberg Intelligence.

The report indicates that current price levels imply a potential uplift of between 18% and 21% to consensus EBITDA forecasts for next year, marking the largest earnings upside since early 2025. Rio Tinto and Glencore are seen delivering the strongest performance, with potential increases of around 20%–21%.

Alon Olsha, senior industry analyst at Bloomberg Intelligence, said earnings revisions for major miners are expected to accelerate, led by Rio Tinto and Glencore. He added that stronger earnings momentum could support further share-funded mergers and acquisitions, while also increasing execution risks, particularly for Rio Tinto.

Growth quality matters as much as scale

The report stresses that the composition of earnings growth is as important as its magnitude, with investors likely to place a higher valuation on gains driven by copper and precious metals rather than iron ore, where market expectations still point to weaker pricing.

For Glencore, strong metallurgical coal and copper prices account for roughly two-thirds of the potential earnings upside, while gold and silver contribute more than 4%, despite not being core profit drivers.

Rio Tinto, meanwhile, has seen a sharp improvement in earnings expectations, with aggregate 2026 EBIT estimates revised up by 18% over the past six months, outperforming peers. Current metal prices imply a further potential upside of 21%, strengthening its relative position but also raising the bar for any large, equity-funded acquisition.

By contrast, Glencore’s 2026 earnings have risen by just 5% over the same period, suggesting greater scope for positive revisions if current price conditions persist.

Copper becomes the “king of metals”

Copper’s growing dominance marks a structural shift in miners’ earnings mix. Previously dubbed “Dr Copper,” the metal has now been labeled the “king of commodities” by Bloomberg Intelligence. Copper is expected to account for more than 35% of diversified miners’ earnings in 2026, up about 14 percentage points from eight years ago, driven more by higher prices and portfolio simplification than by volume growth.

Rio Tinto stands out on production, having increased copper output by 54% since 2019 following the ramp-up of the Oyu Tolgoi project, compared with an 11% increase at BHP. The race to secure copper-rich production lines has pushed miners toward organic growth and early-stage M&A, before assets become fully de-risked and re-rated.

Companies such as Anglo American have pivoted further toward copper following their deal with Teck, with combined copper earnings expected to exceed 70%. BHP follows at around 50%, Glencore at roughly 35%, while Rio Tinto’s copper exposure stands near 26%, with iron ore still dominant at 47%.

2026 performance outlook

Bloomberg Intelligence expects diversified miners’ earnings to rise collectively in 2026, led by Glencore and Anglo American with growth of 24%–28%. Copper remains the key lever, with prices forecast to rise 25% versus 2025 under Bloomberg’s scenario, or about 16% based on consensus, while Glencore’s trading division could provide additional upside if volatility persists.

Cost pressures, particularly labor-related, remain a risk as prices rise. However, companies with meaningful by-product exposure to precious metals such as gold and silver are expected to see those revenues more than offset cost inflation.

Execution will be decisive. Glencore must improve operational performance while advancing Coroccohuayco and Alumbrera. Anglo American faces a critical phase integrating Teck and streamlining its portfolio. BHP needs to stabilize Jansen, clarify its Australian copper strategy, and deliver a technical study for Vicuna in the first quarter. Rio Tinto will focus on lithium integration, advancing ongoing projects, and completing a strategic review of its minerals business, while Vale continues work on plans to double copper output by 2030.

Bloomberg Intelligence concludes that macro trends are set to favor base metals over bulk commodities, with sustained demand from electrification, artificial intelligence, and defense spending, alongside supply constraints and expectations of interest-rate cuts. Iron ore, by contrast, faces a tougher outlook amid faster supply growth and higher trade barriers for Chinese exports.