Spot gold surged past its previous high during Tuesday's midday session, breaking above $4,700 per ounce for the first time in history. The precious metal has climbed 8.8% in the first month of the new year, gaining over $380. New York futures had already eclipsed the $4,700 mark earlier, setting a new all-time high. Concurrently, spot silver touched a historic peak of $94.7295 per ounce before retreating.
Markets are anxiously awaiting Europe's response to former President Trump's threat to impose tariffs on eight European nations opposing his ambitions in Greenland. This threat from the US against its NATO allies has disrupted financial markets, boosting demand for safe-haven assets and revitalizing the "de-risking from America" trade. "We have entered an era of resource nationalism among major powers," stated Peter Kinsella, Global Head of FX Strategy at Union Bancaire Privee SA, in a Bloomberg Television interview. He noted that currencies are not necessarily the optimal vehicle for capitalizing on this geopolitical theme, adding that gold's current trajectory is firmly upward. The crisis has intensified following US actions to gain control over Venezuelan leadership, further accelerating the already sharp rally in precious metals. The Trump administration's renewed attacks on the Federal Reserve have also buoyed gold and silver this year by reigniting concerns about the central bank's independence. "The rally in precious metals did not start with this dispute and is unlikely to end with it," wrote Saxo Bank strategist Ole Hansen in a report. "Instead, the Greenland incident has injected new momentum into a months-long advance, driven by a macro and geopolitical backdrop that is making investors reliant solely on financial assets increasingly uncomfortable." Investors will closely monitor US Supreme Court debates regarding Trump's dismissal of Federal Reserve Governor Cook, a case that could prove critical to the Fed's ability to maintain its independence. With gold trading at elevated levels, investors should brace for some market volatility. However, Aakash Doshi, Head of Gold Strategy at State Street Bank's investment management arm, believes the broader uptrend remains robust and intact. The possibility of gold surpassing $5,000 per ounce by 2026 is no longer a distant prospect. "A few days of profit-taking, or even a month of consolidation, will not alter the genuine upward trend," Doshi remarked in an interview. "The probability of gold reaching $5,000 within the next six to nine months is now above 30%, approaching 40%." This outlook emerges as US stocks also trade near record highs in nominal terms. In Doshi's view, this combination reinforces, rather than diminishes, gold's role as a portfolio hedge. "If the S&P 500 were to turn lower while gold was at $4,500, I might be more concerned," he said. "But with the index near 7,000 and gold at a record high, it actually gives me more confidence in holding gold." Doshi contends that gold's resilience reflects a shifting market focus—increasingly moving away from traditional interest rate-driven narratives toward a greater emphasis on tail risks. The correlation between stocks and bonds remains unstable, while geopolitical and policy uncertainties have intensified on multiple fronts. "This isn't just noise from the headlines," Doshi asserted. "Some of these risks reflect underlying regime shifts—a repricing of tail risks that were previously unimaginable." State Street's January "Gold Monitor Report" highlighted this theme, identifying escalating geopolitical tensions, elevated fiscal deficits, and policy uncertainty as structural factors supporting gold prices. The report noted that government and corporate debt levels, projected to reach historic highs by 2025, are key macro drivers underpinning gold demand. In this environment, gold's role as a low-volatility hedge becomes particularly crucial. "When the distribution of potential outcomes is so wide, it benefits safe-haven assets like gold," Doshi explained. Despite ongoing market speculation about rate cuts, Doshi believes monetary policy is now a secondary influence on gold prices. He stated that while inflation is no longer accelerating, it is unlikely to return to the Fed's 2% target soon. "I wouldn't call it 'disinflation'," he commented. "I call it 'inflation stabilization'. We are still above target, but there are no unexpected upside surprises." According to State Street's base case, the Fed is likely to remain on hold throughout 2026, with any further easing contingent on a substantial deterioration in the labor market. Historically, however, gold has performed well during extended Fed policy pauses. "When the Fed is on hold, gold can actually perform quite well—as long as the policy bias ultimately remains toward cutting," Doshi pointed out. Beyond macro uncertainties, physical and investment demand continues to provide solid support for gold. Central bank purchasing remains a structural pillar. State Street observed that official sector buying is becoming increasingly price-inelastic, reinforcing long-term support for gold prices above $4,000 per ounce. Exchange-traded fund (ETF) flows also tell a compelling story. Gold-backed ETFs ended 2025 with record inflows, breaking their typical pattern of year-end seasonal weakness. State Street estimates that, even under conservative assumptions, this inflow cycle may still have "considerable room to run" in 2026. Despite persistent inflows, total holdings remain below the record highs set in 2020. "Gold is not yet an 'overweight' asset," Doshi said. "There is still room for global asset allocation to increase its gold weighting. The $4,000 to $5,000 range looks very solid for gold." He believes a period of consolidation would not harm the overall bullish outlook. "A few months of sideways price action would not break this trend," Doshi concluded. "On the contrary, it would allow investors to re-enter—especially since every dip over the past few months has been actively bought."
