Gold surged above $5,000 an ounce for the first time on Monday, reaching a record high of $5,100 before settling at $5,091, as investors flocked to safe-haven assets amid US political and economic uncertainty under President Donald Trump.
Analysts cited Trump's chaotic policies, including threats of 100% tariffs on Canada over China deals and a showdown with Europe over Greenland, as well as rising fears of another US government shutdown after a fatal incident involving immigration agents in Minneapolis.
The precious metal has risen nearly 90% since Trump's second inauguration just over a year ago. Independent analyst Ross Norman said gold had become a haven from stocks and bonds affected by the president's erratic policy shifts, describing a 'vaporising of trust' that was driving movement away from the dollar and dollar assets. He predicted gold could reach $6,400 an ounce this year and average $5,375 in 2026.
Japan's government also contributed to global anxiety after Prime Minister Sanae Takaichi pledged tax cuts, including suspending the consumption tax on food, if her party wins a snap election on 8 February. Investors feared the unfunded spending spree could mirror the impact of Liz Truss's 2022 mini-budget.
Meanwhile, the yen recovered against the dollar amid speculation that the US Federal Reserve had used resources to buy the Japanese currency. Fed officials meet this week, with expectations of rates remaining at 3.5–3.75% but potential moves to weaken the dollar, which fell nearly 10% last year.
