Gold smashed through the $5,000-an-ounce threshold for the first time, extending a breakneck rally fueled by U.S. President Donald Trump's reshaping of international relations and investor flight from sovereign bonds and currencies.
Bullion jumped as much as 2.5% to more than $5,111 on Monday, as dollar weakness reinforced demand.
A gauge of the greenback has fallen almost 2% in six sessions, with speculation that the U.S. may assist Japan in efforts to boost the yen adding to worries over Federal Reserve independence and Trump's erratic policy making.
Silver also spiked to a record above $110 an ounce.
Gold's dramatic gains drive home bullion's historic role as a gauge of fear in markets. Fresh from its best annual performance since 1979, it's up about 18% so far this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasurys.
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.
"Gold is the inverse of confidence," said Max Belmont, a portfolio manager at First Eagle Investment Management, which holds billions of dollars worth of bullion. "It's a hedge against unexpected bouts of inflation, unanticipated drawdowns in the market, flare-ups in geopolitical risk."
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.
The central bank purchases that helped to drive gold's gains also look set to continue. Goldman Sachs Group Inc. expects buying of about 60 tons a month this year, an amount of metal worth almost $10 billion at current market prices. Much of those purchases are undeclared, and do not appear in economic data.
Poland's central bank, the world's biggest reported buyer, recently approved plans to purchase another 150 tons. That's more than the entire holdings of large economies such as Mexico or Brazil.
"Our primary goal is to build an appropriate portfolio for these unstable geopolitical times, one that will guarantee Poland stability, security, and credibility," management board member Artur Sobon told Bloomberg News. "The price is not a primary consideration for us."
Gold's appeal is also showing up in speculator positioning data, while options traders are bracing for more upside in a red-hot market where few wish to stand against the wave. The one-month risk reversal, a gauge of sentiment and positioning, spiked to the highest level since April 2024.
"While risk reversals typically turn positive during strong gold rallies, the current move stands out for its size and persistence," said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. This shows that the options market is "positioning for more than just a short-term price jump, consistent with gold carrying a geopolitical and confidence premium," he said.
Gold rose 2% to $5,087.99 an ounce as of 11:15 a.m. in London. Silver advanced 5.8% to $109.16. Platinum climbed to a record, and palladium also rose. The Bloomberg Dollar Spot Index was down 0.4%, after losing 1.6% last week.
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