Gold prices crossed the $5,000 per ounce mark for the first time on Monday, extending a historic rally as investors rushed toward safe haven assets amid political uncertainty in the United States and rising geopolitical risks.
Why Did Gold Prices Cross $5,000?
The rally was triggered by growing fears of a potential US government shutdown. Senate Democrats refused to support a funding bill without changes to homeland security provisions, increasing the risk that Congress could miss the January 31 funding deadline.
Market participants tend to move into gold during periods of political stress, as the metal is seen as a store of value when confidence in government and financial systems weakens.
Tariff Threats Add to Market Anxiety
Risk aversion intensified after US President Donald Trump warned of imposing 100% tariffs on Canadian goods if Canada deepens trade ties with China.
Canadian Prime Minister Mark Carney later clarified that Ottawa has no plans for a full free trade agreement with Beijing, stating that recent arrangements only reduce tariffs in selected sectors.
Despite this reassurance, markets remained cautious as trade related risks continue to cloud the global outlook.
Gold Forecast Raised as Demand Stays Strong
According to analysts at Goldman Sachs, the upside momentum in gold remains strong. The bank recently raised its year end gold price forecast to $5,400 per ounce from $4,900.
The upgrade was driven by sustained central bank buying and increased diversification by private investors seeking protection against economic and geopolitical shocks.
Silver Hits All Time High Above $108
Silver prices surged more than 5%, climbing above $108 per ounce to fresh all time highs. The rally has been supported by strong safe haven demand and tight physical supply.
Higher prices have encouraged heavy retail buying in China and India, where investors are increasingly opting for 1 kilogram silver bars. Chinese manufacturers are also shifting production away from jewelry toward investment products to meet rising demand.
What This Means for Investors
The sharp rise in gold and silver highlights a broader shift toward defensive assets. With political uncertainty, trade tensions, and supply constraints dominating headlines, precious metals continue to attract strong inflows.
As long as shutdown risks and geopolitical pressures remain unresolved, market participants expect gold and silver prices to stay well supported.
US Dollar Index hits lowest level since Sept 19 amid growth worries
The US Dollar Index has extended its monthly decline to 1.21%, slipping to its weakest level since September 19 and keeping pressure on the greenback.The move follows the dollar’s worst yearly performance since 2017, raising concerns about the durability of US economic momentum.
Markets are increasingly pricing in slower US growth, while global capital flows are gradually shifting away from the dollar toward other assets.
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