Gold reached a new all-time high above $5,000 an ounce on Monday (25/01), extending its record-breaking rally as investors turned to the precious metal amid growing geopolitical and global fiscal risks.

Spot gold rose 1.2% to $5,042 an ounce, while U.S. February gold futures climbed 1.2% to $5,036 an ounce.

Geopolitical Tensions Drive Demand

The rally in gold reflects rising global tensions, including flashpoints in Greenland, Venezuela, and the Middle East, which have strengthened the metal’s appeal as a hedge against uncertainty.

HSBC noted that “The recent further leg up in gold and silver prices has arrived on the back of geoeconomics issues related to Greenland.”

Silver also gained Monday, with spot prices jumping 3% to $106.1 per ounce, supported by industrial demand.

Sustained Investment Support

Analysts at Union Bancaire Privée highlighted that both institutional and retail demand have supported the price surge.

They stated, “We anticipate that gold should enjoy another strong year, reflecting ongoing central bank and retail investment demand, with a year-end target price of USD 5,200 per ounce.”

Central Banks and ETFs Boost Gold Prices

Goldman Sachs noted that the demand base for gold has broadened beyond traditional channels.

Western ETF holdings have increased by about 500 tonnes since early 2025. Additionally, high-net-worth families have increasingly purchased physical gold to hedge macro-policy risks.

Central bank buying remains robust, with Goldman estimating an average of 60 tonnes per month, far above the pre-2022 average of 17 tonnes.

Emerging-market central banks continue to shift reserves into gold. Goldman also stated, “We assume that hedges of global macro policy risks remain stable as these perceived risks (e.g., fiscal sustainability) may not fully resolve in 2026.”

Higher Forecasts Reflect Ongoing Risks

Reflecting sustained demand and hedging behavior, Goldman Sachs recently raised its December 2026 gold price forecast to $5,400 an ounce, up from $4,900, emphasizing that hedges against global macro and policy risks are effectively lifting the starting point for gold prices this year.

PHOTO: FREEPIK

This article was created with AI assistance.

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