Gold Breaks $5,000 an Ounce as Dollar Doubts and Geopolitics Fuel a New Rush to Safety

Gold surged above $5,000 an ounce for the first time on Monday, a milestone that underscores rising anxiety about the U.S. dollar, global politics and the reliability of traditional safe assets.

Spot prices briefly climbed as high as about $5,111 an ounce in London trading before easing back, while the most active April futures contract on the New York Mercantile Exchange’s COMEX division traded up through $5,100, touching roughly $5,120 intraday. By the U.S. close, gold was still up more than 2% on the day, around $5,091 an ounce, after a six-day rally.

A year ago, the metal traded near $2,700. The move to $5,000 marks roughly an 85% gain over 12 months and caps one of the fastest advances in modern gold-market history.

Why gold is soaring

The surge is being driven by a weaker U.S. dollar, falling real bond yields and a drumbeat of political and geopolitical risks that have pushed investors and central banks toward what they view as a more tangible form of protection. It comes as the Federal Reserve heads into a closely watched policy meeting this week and as Donald Trump’s second term in the White House reorders assumptions about trade, fiscal policy and alliances.

“There has been a vaporising of trust,” said Ross Norman, an independent precious metals analyst in London. “We are seeing a movement away from the dollar and dollar assets.”

He expects gold prices could average more than $5,300 this year and reach as high as $6,400 an ounce if current trends persist.

The U.S. Dollar Index, which measures the greenback against a basket of major currencies, slipped below 98 on Monday and has lost nearly 10% of its value over the past year. Analysts at major banks say the dollar has come under sustained pressure as markets price in the likelihood that the Fed will begin cutting interest rates later in 2026, reducing the appeal of dollar-denominated assets.

Lower yields on U.S. Treasuries have reinforced that move. Government bond yields started the week on the back foot as traders looked ahead to the Fed’s decision and press conference on Wednesday. Futures pricing suggested markets expect the central bank to leave its benchmark rate unchanged this month but deliver several cuts later in the year.

Because gold does not pay interest, its price tends to rise when real, inflation-adjusted bond yields fall. The expectation of easier U.S. monetary policy has therefore become a significant tailwind.

Politics and geopolitics add urgency

Political risk has added a layer of urgency. Gold prices have jumped about 90% since Trump was sworn in for a second term just over a year ago, according to market data. Investors and officials cite a series of confrontations and threats that have unsettled allies and markets alike.

In recent weeks, Trump has threatened 100% tariffs on Canadian goods if Ottawa strikes certain trade deals with China, renewed a long-standing dispute with European governments over the future of Greenland, and clashed with Democrats in Congress over immigration enforcement and funding for the Department of Homeland Security. The standoff has raised the possibility of another partial U.S. government shutdown.

“Trump and the uncertainty he creates on multiple levels” are key factors behind the rally, said Ole Hansen, head of commodity strategy at Saxo Bank.

He pointed to tariff risks, the prospect of renewed trade wars and uncertainty over the administration’s approach to alliances as reasons investors have increased their gold holdings.

Tensions are not confined to Washington. In Japan, new Prime Minister Sanae Takaichi has floated aggressive tax cuts, including suspending the 8% consumption tax on food, despite a debt load around 230% of gross domestic product. The proposals have unnerved some bond investors and added to a broader unease about fiscal sustainability across advanced economies.

At the same time, U.S. naval deployments toward the Middle East have fueled renewed speculation about potential military action against Iran, reviving traditional arguments for holding gold as a hedge against war and energy shocks.

A structural shift: who is buying and why

Behind the day-to-day headlines, a structural shift appears to be underway in who owns gold and why.

Central banks: steady, price-insensitive demand

Central banks have emerged as steady, price-insensitive buyers. Official institutions bought more than 1,000 metric tons of gold in each of 2023 and 2024, according to industry data, marking three straight years of purchases above that threshold and extending a 15-year streak of net buying. Global official gold reserves are estimated at about 32,000 tons, up sharply from levels in the late 2000s.

Many of those purchases have come from emerging market central banks looking to diversify away from U.S. Treasury securities and reduce their exposure to potential financial sanctions.

Strategists at Goldman Sachs said this month that central banks are responsible for “the bulk of the upside” in gold over the past year and raised their end-2026 price target from $4,900 to $5,400 an ounce. They cited concerns about “currency debasement, fiscal stability and sanctions risk” as key motivations for official-sector buying.

ETFs and derivatives: momentum builds

Exchange-traded funds that hold bullion on behalf of investors have added another powerful source of demand. Gold-backed ETFs took in a record $89 billion in new money during 2025, lifting their holdings to about 4,025 tons and assets under management to roughly $559 billion. Western funds that had shed gold after the pandemic-era peak reversed course last year, with consistent inflows through the second half of 2025.

Options markets reflect a similar bullish tilt. Data from major derivatives exchanges show a build-up in call options on gold, indicating traders are paying up for the right to buy at higher prices, and positioning in COMEX futures has become heavily one-sided. The latest figures from the U.S. Commodity Futures Trading Commission show speculative net long positions around 245,000 contracts, close to multi-year highs.

The rally’s diplomatic fallout

The revaluation of gold is also spilling into diplomacy.

In Germany, a group of economists and politicians has called on the Bundesbank to repatriate part of the country’s gold reserves held at the Federal Reserve Bank of New York. Germany stores roughly 1,236 tons there, about 37% of its total reserves.

“Given the current geopolitical situation, it seems risky to store so much gold in the U.S.,” said Emanuel Mönch, an economist who has urged a review of the arrangement.

Michael Jäger, head of the German Taxpayers’ Association, said in a separate interview that “Trump is unpredictable and he does everything to generate revenue. That’s why our gold is no longer safe in the Fed’s vaults.”

Katharina Beck, a member of the German Bundestag for the Green Party, said in a recent statement that the country’s gold reserves are an “important anchor of stability and trust” and “must not become pawns in geopolitical disputes.”

Those debates reflect a broader discomfort among some U.S. allies about over-reliance on American institutions in an era of more transactional politics.

Ray Dalio, founder of hedge fund Bridgewater Associates, told an audience at the World Economic Forum in Davos on Jan. 20 that gold has become a “vital hedge” for portfolios and warned that Trump’s policies could prompt foreign governments to reduce their U.S. asset holdings, potentially leading to what he called a “capital war.” Dalio said he recommends that investors hold 5% to 15% of their portfolios in gold, depending on their risk tolerance.

Risks of a pullback

Not everyone is convinced the metal can continue climbing without a setback. Analysts at China International Capital Corp. said in a recent note that while concerns about the U.S. dollar’s credit quality and fiscal path support the long-term case for gold, current valuations are at the “upper bounds” of what fundamentals justify. Being constructive on gold, they wrote, “doesn’t necessitate blind faith.”

Zhu Shanying, a researcher at Citic Futures, cautioned that some of the short-term drivers for gold, such as expectations of delayed Fed rate cuts and unresolved trade tensions, are fragile. A faster-than-expected normalization of U.S. policy or an easing of geopolitical stress could trigger a sharp correction, he said.

Households are also exposed. In countries such as China, India and across the Middle East, gold jewelry, coins and small bars function as a primary savings vehicle. The World Gold Council has reported that Chinese retail investors in particular have turned to gold amid weak domestic stock and property markets and a lack of attractive alternatives. While longstanding holders have seen their wealth jump, new buyers are paying record prices and could face significant losses if the market turns.

Winners, losers—and what comes next

For now, the rally is a boon for gold-mining companies and resource-dependent economies. Shares of Newmont Corp., the world’s largest gold producer, jumped more than 4% in premarket trading Monday, with peers including Barrick Gold Corp. and Agnico Eagle Mines Ltd. also extending recent gains. Higher bullion prices improve profit margins, encourage new investment and can lift tax revenues in producer countries such as South Africa and Australia.

Whether $5,000 an ounce proves to be a fleeting spike or the foundation of a new trading range will depend less on geology than on policy. A stronger dollar, firmer real yields and a period of relative calm in global politics could all sap demand. A renewed escalation in tariff fights, a loss of confidence in the Fed’s independence or fresh geopolitical shocks could push prices higher.

What Monday’s record makes clear is that gold has moved back to the center of the global financial conversation. Once a relic of the pre-fiat era, it is again serving as a daily referendum on trust in currencies, institutions and the governments that back them.