ISLAMABAD: Gold prices surged to a fresh record above $5,000 per ounce on Monday, as investors actively sought safety amid escalating geopolitical and trade tensions. Spot gold climbed 1.79% to $5,071.96 per ounce by 0159 GMT after touching an intraday high of $5,085.50. At the same time, US gold futures for February delivery advanced 1.79% to $5,068.70 per ounce, reinforcing the strength of the ongoing rally.
Strong Demand Drives Historic Rally
Gold has now gained 64% in 2025, supported by intense safe-haven demand, expectations of easing US monetary policy, and aggressive central bank buying. China extended its gold purchases for a fourteenth consecutive month in December, while investors continued to pour funds into gold-backed exchange-traded funds, pushing inflows to record levels. Moreover, prices have already risen more than 17% this year, highlighting sustained bullish momentum.
Market sentiment has weakened as geopolitical and trade risks continue to mount. US President Donald Trump recently softened his stance on imposing tariffs against European allies to exert pressure on Greenland. However, he reaffirmed plans to impose a 100% tariff on Canada if it proceeds with a trade deal with China. In addition, he threatened 200% tariffs on French wines and champagne, which further unsettled global markets.
Weaker Dollar Lifts Precious Metals
Meanwhile, a stronger Japanese yen pushed the dollar lower, prompting investors to trim dollar holdings ahead of the Federal Reserve meeting. A weaker dollar makes gold more affordable for holders of other currencies and therefore boosts demand.
Philip Newman, director at Metals Focus, said he expects further upside, with prices potentially peaking near $5,500 later this year, despite short-term profit-taking.
Other precious metals also posted sharp gains. Spot silver jumped 4.57% to $107.65 after hitting a record $108.60. Platinum rose 3.26% to $2,857.41, while palladium gained 3.2% to $2,074.40, as strong momentum and tight supplies continued to drive prices higher.
