Gold Smashes Record to Top $5,100 as Safe-Haven Demand Intensifies
The precious metal is up over 17% this year, fueled by geopolitical tensions, fiscal worries, and a weaker U.S. dollar.
Gold prices surged past $5,100 an ounce for the first time on Monday, extending a powerful rally as investors flock to the traditional safe-haven asset amid rising geopolitical tensions and mounting concerns over fiscal spending in developed economies.
The precious metal climbed as much as 2.4% to hit the $5,100 mark, pushing its year-to-date gains above 17%. The move follows gold’s best weekly performance since the 2008 financial crisis, underscoring a sharp increase in investor demand.
This historic rally builds on a two-year trend fueled by aggressive buying from central banks seeking to diversify away from the U.S. dollar and by investors hedging against market volatility.
“This constitutes an option for investors to diversify their exposure to monetary and fiscal policy uncertainty,” Samantha Dart of Goldman Sachs told the Financial Times.
The velocity of the rally has outpaced even bullish forecasts.
“Every time someone puts out a gold forecast that looks aggressive, it gets met within a few weeks,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “The policy environment continues to point to the uncertainty of the new world order.”
Other precious metals also advanced, with silver and platinum prices rising 3.7% and 2%, respectively, to reach historic highs. The rally in metals was aided by a weaker U.S. dollar, which fell 0.5% against a basket of major currencies including the pound and the euro.
“Commodities and precious metals often strengthen when the dollar is weaker,” said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management. A softer dollar makes gold cheaper for buyers holding other currencies.
Analysts also pointed to market jitters stemming from Japan, where a rise in government bond yields last week sparked concerns over the country’s ambitious spending plans. “This is related to what is happening in the Japanese bond market, because gold is considered a safe haven,” Dart noted.
The dollar also weakened 1.1% against the yen, trading around ¥154 on Monday amid speculation of official intervention to support the Japanese currency.
