Gold prices surged past $5,000 per ounce for the first time on Monday, with silver also climbing to $110 per ounce amid various global tensions impacting the U.S. dollar. Investors have been flocking to precious metals as safe havens in recent months.
Daniela Hathorn, a senior market analyst at Capital.com, emphasized that as uncertainties surrounding fiscal dominance, geopolitical fragmentation, and central bank credibility persist, precious metals are likely to remain in demand as both hedges and alternatives.
The U.S. dollar hit a multi-month low against the Japanese yen following statements from officials in both Japan and the U.S. indicating potential interventions to bolster the yen. The yen’s recent rebound was fueled by speculation of coordinated efforts between the two countries.
Since Sanae Takaichi became Japan’s prime minister in October, the yen has faced significant pressure due to proposed spending increases and tax cuts, raising concerns about Japan’s financial stability. As a result, Japanese government bond yields have reached record levels, while the Bank of Japan is gradually raising interest rates to combat inflation, causing Japan’s Nikkei to drop.
As the U.S. dollar weakened against major currencies and volatility increased, gold continued its remarkable rally, reaching a new all-time high. Gold prices surged by 2.1% to $5,089 per ounce, with silver also rising by almost seven percent to $110 per ounce, marking substantial gains in January.
Market analysts, like Chris Scicluna from Daiwa Capital Markets, highlighted the appeal of gold for central bank reserve diversification amid intervention talks and broader global economic events. The potential involvement of the U.S. in the Japanese currency market is seen as a significant factor affecting currency dynamics in Asia and beyond.
Global markets reacted mixed on Monday, with France’s CAC 40 and Britain’s FTSE 100 dipping slightly, while U.S. markets opened higher. Investors are closely monitoring upcoming earnings reports from global companies, with concerns over the impact of recent U.S. tariff policies.
Recent threats from U.S. President Donald Trump to impose a 100% tariff on Canadian goods have stirred market uncertainties. Trump’s warnings are tied to potential trade deals between Canada and China, reflecting ongoing trade tensions between the countries. Benchmark crude oil prices also saw moderate gains on Monday.