Gold surged above $5,000 per ounce for the first time on Monday, with silver also climbing to $110 per ounce, driven by various geopolitical tensions impacting the U.S. dollar. The demand for precious metals has been on the rise in recent months as investors seek secure investment options.
Daniela Hathorn, a senior market analyst at Capital.com, highlighted that as long as uncertainties surrounding fiscal dominance, geopolitical fragmentation, and central bank credibility persist, precious metals are likely to remain at the forefront as both hedges and alternatives.
The U.S. dollar experienced a decline to its lowest level since mid-November following a 1.5% rise in the Japanese yen in Europe. Despite recent gains against the yen, the dollar saw a sharp drop after indications from Japanese and U.S. officials suggesting potential interventions to strengthen the yen.
The yen’s rebound was attributed to speculation regarding intervention efforts by Japanese authorities, possibly in coordination with the U.S., as mentioned by Ipek Ozkardeskaya, a senior analyst at Swissquote. The yen has faced continuous pressure since Sanae Takaichi assumed office as Japan’s prime minister in October, with concerns arising over increased spending and tax cuts leading to financial strain.
As the U.S. dollar weakened against major currencies and market volatility increased, gold reached a new record high, with substantial gains in January. Gold prices surged to $5,089 per ounce, marking a 17% increase, while silver rose nearly 7% to $110 per ounce, up over 50% in the same month.
Chris Scicluna, an economist at Daiwa Capital Markets, emphasized the compelling narrative behind gold, driven by central bank reserve diversification amid intervention discussions and broader events in the U.S. The potential involvement of the U.S. in the Japanese currency market was highlighted as significant, affecting Asian currencies and reinforcing the diversification trend away from the U.S.
Global markets witnessed mixed movements on Monday, with declines in European shares and slight gains in U.S. markets. Investors are monitoring upcoming earnings reports from global companies, anticipating the impact of recent U.S. tariff policies. Concerns arose following President Donald Trump’s threat to impose a 100% tariff on goods from Canada if a free trade deal with China is signed. Canadian Prime Minister Mark Carney denied plans for such an agreement, highlighting previous tariff actions between the two countries.
In other market news, benchmark U.S. crude oil prices rose to $61.50 per barrel, while Brent crude, the international standard, edged up to $65.55 per barrel.