Gold Price Climbs Above $5,000 for the First Time

The price of gold has jumped above $5,000 (£3,659) an ounce for the first time ever, extending a historic rally that saw the precious metal rise by more than 60% in 2025.

Gold’s importance in global markets is rising. Investidores, banks, e households use it to shield against political and market risks. The move marks one of the strongest sustained advances in the metal’s modern trading history.

Geopolitical tensions fuel market uncertainty

It comes as tensions between the US and NATO over Greenland have added to increasing concerns about financial and geopolitical uncertainty.

Markets have also been unsettled by US President Donald Trump’s trade policies. On Saturday, he threatened a 100% tariff on Canadian goods if it reaches a trade deal with China.

Gold as a barometer of market anxiety

Gold is often regarded as a refuge in times of uncertainty and a barometer of market anxiety. The latest surge has been fuelled by a series of market-destabilising global and domestic actions by U.S. President Trump, including military action against Venezuela, a criminal investigation into Federal Reserve Chair Jerome Powell, and now-withdrawn tariff threats against NATO allies over Greenland. Together, these developments have increased investor unease and boosted demand for safe‑haven assets.

Demand for the precious metal has also been supported by a weaker US dollar, higher-than-expected inflation, expectations that the Fed will cut interest rates again this year, and continued buying by central banks around the world.

Gold rose 1.4% on Sunday 25 January to $5,058 a troy ounce, as of 8:14 pm ET.

Silver, another safe-haven asset, climbed 4.5% to $107.8 an ounce. Like gold, last year silver also recorded its strongest performance since 1979, with a 141% price increase.

Despite gold hitting the $5,000 benchmark, analysts remain largely bullish, arguing prices could climb further as uncertainty persists.

Before the rally, Goldman Sachs analysts had raised their gold price forecast to $5,400 per troy ounce, citing private sector demand in the yellow metal due to “lingering global policy uncertainty,” according to a research note published last week.

Investors, interest rates, and the weak dollar

Gold and other precious metals are seen as safe-haven assets that investors turn to in times of uncertainty. A weaker U.S dollar and expectations of interest rate cuts by the Federal Reserve have made non-yielding assets like gold more attractive, while higher-than-usual inflation has reinforced its appeal as a hedge.

Ongoing geopolitical conflicts, such as the wars in Ukraine and Gaza, have contributed to rising gold prices.

Gold’s appeal lies in its scarcity as the price strengthens

One of gold’s biggest attractions is its relative scarcity. According to the World Gold Council trade association, only about 216,265 tonnes of the metal have ever been mined.

Most of this was extracted since 1950, as advances in mining technology and the discovery of new deposits expanded production. The US Geological Survey estimates that 64,000 tonnes of gold remain underground.

Overall gold supply is expected to plateau in the coming years. Limited supply has helped reinforce gold’s long‑term value proposition.

A really good diversifier

“When you own gold, it’s not attached to the debt of somebody else like a bond is or an equity where the performance of a company will drive performance,” said Nicholas Frappell, global head of institutional markets at ABC Refineries.

He added: “It’s a really good diversifier in a very uncertain world.“

‘People go to gold’

Gold had a blockbuster year in 2025, posting its largest annual gain since 1979 as investors flocked to precious metals.

Concerns over Trump’s tariff threats and overvalued AI stocks rattled financial markets. Gold responded by hitting repeated new record highs.

“I think a large part of that is the extreme uncertainty we have around US policy,” said Nikos Kavalis from research consultancy Metals Focus.

Interest rate cuts lift precious metals

Gold prices often rise not only during times of economic uncertainty but also when investors anticipate interest rates cut.

Lower rates generally lead to smaller returns on investments like bonds. As a result, investors turn to alternatives such as gold and silver.

The US Federal Reserve is widely expected to reduce its key interest rate twice this year.

Ahmad Assiri, Research Strategist at Pepperstone said: “It’s inversely correlated because the opportunity cost of keeping the money in a [government bond] is really not worth it anymore, so people go to gold.“

Central banks move away from the dollar as gold price rises

Gold buying is not limited to private investors.

Last year, central banks boosted their gold reserves by hundreds of tons, according to the World Gold Council.

“There’s a very clear shift away from the US dollar, which is benefiting gold immensely,” said Kavalis.

Could gold’s rally reverse?

Gold has continued its rally at the start of this year, but Frappell warns the “news-driven” market could also trigger a fall in its price.

“There’s got to be scope for unexpected news that actually might be positive for the world and not necessarily positive for gold,” he said.

Cultural demand for gold price remains strong

Not everyone buys gold for investment reasons. In many cultures, the metal is bought during festivals or given as gifts for occasions like weddings.

In India, the annual Diwali festival is considered an auspicious occasion to buy gold, believed to attract wealth and good luck. According to the US investment bank Morgan Stanley, Indian households hold $3.8tn of gold, equivalent to 88.8% of the country’s gross domestic product (GDP).

Neighbouring China is the world’s largest single consumer market for gold, with many people buying it for luck.

“We often see a seasonal uptick in demand around Chinese New Year, which we are seeing at the moment to an extent,” said Kavalis, referencing the upcoming Year of the Horse, which begins in February.

DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication.