The price of gold has jumped above $5,000 an ounce for the first time as Donald Trump’s chaotic policies and proclamations drive more investors to seek safe harbour in the precious metal.
Gold reached a record high of $5,100 (£3,723) on Monday morning, before easing back to settle up 2.2% at $5,091.
The moment came after Trump threatened Canada with 100% tariffs if Ottawa made “a deal with China”, and after the US president’s showdown with Europe over the future of Greenland.
With global financial markets already jittery, there are also rising fears of another US shutdown after Democrats threatened funding for the Department of Homeland Security after federal immigration agents killed a man in Minneapolis on Saturday.
Monday’s milestone is the latest in an extraordinary and historic run for gold, the price of which has jump by almost 90% since Trump’s second inauguration a little over a year ago.
Ross Norman, an independent analyst, said gold had become a safe haven from stocks and bonds that were strongly influenced by the US president’s erratic policy shifts. “There has been a vaporising of trust,” Norman said. “And it takes a while to win back that trust, which is why in the meantime we are seeing a movement away from the dollar and dollar assets.”
He said gold had much further to rise this year and predict a high of $6,400 an ounce, with an average of $5,375 over 2026. “The only certainty at the moment seems to be uncertainty, and that’s playing very much into gold’s hands,” Norman added.
Steve Miller, an investment strategy adviser at GSFM, an Australia-based asset manager, said the rise in gold prices was the most spectacular in his four decades of working in financial markets. “The second oil shock and the inflation scare in the late ’70s, early ’80s would be the last time I remember when gold did this – and that was before my time in markets,” he said.
Anxiety on international money markets has also been fuelled by a new administration in Tokyo, which has pledged to cut taxes to make spiralling food costs more affordable.
Sanae Takaichi, Japan’s prime minister since last October, has indicated she wants to embark on an unfunded spending spree if her conservative Liberal Democratic party is re-elected in a snap election to be held on 8 February.
Last week, Takaichi, who is the country’s first female prime minister, raised the prospect of tax cuts to win over voters, initially by suspending Japan’s 8% consumption tax on food. However, this spooked international investors, who fear the campaign promise will have the same effect as Liz Truss’s 2022 mini-budget in the UK. Japan has $9tn of debt – equivalent to 230% of its economy – and the highest among G7 countries.
On Monday, the yen recovered some of its value against the dollar after speculation that the US Federal Reserve had used some of its vast resources to buy the Japanese currency.
Miller, a former head of fixed income at investment giant BlackRock, said the latest lift in gold came on rising concerns that Trump’s administration would take steps to weaken the world’s most important currency, the US dollar. “If the Federal Reserve is doing this on behalf of the US Treasury, they’re only doing it for one reason: they think the US dollar is too high,” he said.
Key voices within the US administration have long suggested they would like a weaker the dollar to help revitalise the US domestic manufacturing base. A weaker dollar would undermine the value of US mainstay assets such as Treasury bonds, which has burnished gold’s allure as the ultimate store of value.
Fed officials are to meet on Tuesday and Wednesday to consider their next move on interest rates amid mounting pressure from the White House to reduce the cost of borrowing at a faster pace than expected by financial markets.
The US central bank is expected to hold rates at a range of 3.5% to 3.75% this week, but could use some of its vast resources to buy yen to support the currency and at the same time weakening the dollar. The dollar lost almost 10% of its value against a basket of international currencies last year. It expected to continue falling in value in 2026 as the Fed accelerates cuts to interest rates.
