Gold surged past $5,000 an ounce for the first time, extending a breakneck rally fueled by US President Donald Trump's reshaping of international relations and investor flight from sovereign bonds and currencies.
Bullion jumped as much as 2.1% to near $5,100 as dollar weakness reinforced demand. A gauge of the greenback has fallen almost 2% in six sessions, with speculation that the US may assist Japan in efforts to boost the yen adding to worries over Federal Reserve independence and Trump's erratic policymaking. Silver also spiked to a record above $109 an ounce, gaining for a third day.
Gold's dramatic gains - the metal has more than doubled over the last two years - drives home bullion's historic role as a gauge of fear in markets. Fresh from its best annual performance since 1979, it's risen more than 17% so far this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasuries. A massive selloff in the Japanese bond market last week is the latest example of investors rejecting heavy fiscal spending.
In recent weeks, the Trump administration's actions - attacks on the Fed, threats to annex Greenland, military intervention in Venezuela - have also spooked markets. For investors looking to navigate this uncertainty, the haven appeal of gold has rarely been more attractive.
"Gold is the inverse of confidence," said Max Belmont, a portfolio manager at First Eagle Investment Management. "It's a hedge against unexpected bouts of inflation, unanticipated drawdowns in the market, flare-ups in geopolitical risk."
Over the weekend, Trump threatened Canada with 100% tariffs on all its exports to the US if Ottawa makes a trade deal with China, escalating bilateral tensions. Meanwhile, political uncertainties within the US remain high as Senate Democratic leader Chuck Schumer vowed to block a massive spending package unless Republicans strip funding for the Department of Homeland Security - increasing the risk of a partial government shutdown.
Swelling public debt in advanced economies has become another key pillar of gold's rally. Some long-term investors, convinced that inflation will become the only path to state solvency, have piled into gold as a way to preserve purchasing power.
"People have become a lot more worried about the long-term debt trajectory over the past three years," said John Reade, chief strategist at the World Gold Council. "The place that I have found the debasement and debt arguments come through the most has been with family offices. They're thinking about generational wealth protection, rather than the short term."
This debasement trade reached its zenith in late 2025, when prominent investors like Citadel's Chief Executive Officer Ken Griffin and Bridgewater Associates Founder Ray Dalio pointed to gold's rise as a warning signal.
Investors are now waiting for Trump's pick for the next Fed chair after the US president said he has finished interviewing candidates, reiterating that he has someone in mind for the job. A more dovish chair would increase bets on further interest-rate cuts this year - a positive for non-yielding bullion - after three successive reductions.
"Many of the current Trump-induced geopolitical uncertainties are unlikely to go away anytime soon," said Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp Ltd. That means "gold could remain in play in the coming months and even years, although investors must brace for intermittent pullbacks after the strong gains in the past 12 months."
Gold's appeal is showing up in positioning data. Hedge funds and other large speculators increased net-long positions in the metal to the highest in 16 weeks for the week to Jan. 20, according to US government figures.
Silver's advance has been supported by strong investment demand, including from retail buyers from Shanghai to Istanbul. At the same time, investors are also waiting for clarity over potential US trade tariffs.
Gold traded 1.5% at higher at $5,063.82 an ounce at 1:09 p.m. in Singapore. Silver advanced 4.5% to $107.78. Platinum climbed to a record, and palladium also rose. The Bloomberg Dollar Spot Index was down 0.4% after losing 1.6% last week. - Bloomberg
