Jerome Powell

Gold has risen more than 20% since the start of the year, surpassing the significant $5,500 milestone this week.

The precious metal’s rally, seen alongside a lift in commodities such as silver and platinum, is driven by a number of interlinking factors — including geopolitical tensions, rising government debt, and an uncertain outlook for interest rates and inflation.

Gold’s appeal is linked to the narrative that it is a safe haven asset, acting as a “hedge against inflation”. It typically increases in value when the dollar declines, it’s easily sold, and it’s also a tangible, finite commodity.

These factors are significant at a time when questions are being raised about the dollar, as well as fiat currencies like the Japanese yen. As government debt rises, so do fears around inflation and fiscal stability.

In the US, incendiary policies from the Trump administration are increasing market jitters around the health of the economy, prompting what some analysts view as a “sell America” trade. In recent weeks, the president has threatened to conquer Greenland, hinted at US intervention in Iran, sought to influence policy at the Federal Reserve, and launched an attack on Venezuela. To top that off, he’s also threatened more tariffs on trading partners, bringing back a well-worn tactic from 2025.

Although analysts argue that the dollar will not be unseated as the world’s reserve currency anytime soon, it seems investors are diversifying away from the greenback. The US’ next moves remain uncertain, and no one wants to be caught in the crosshairs. As an alternative to fiat currencies, gold may seem like a strong portfolio option.

“Investors previously bought US Treasuries as they were viewed as being quite risk-free. But especially because of the way that some wealth has been weaponised, certain countries are becoming more careful about how they allocate their capital,” said Simon Popple, managing director at Brookville Capital. “The dollar debasement helps the gold price,” he told Euronews.

Even so, Popple and other analysts stress that a major factor lifting the bullion price is far less complicated. As gold continues to make headlines, investors are caught up in the momentum, sparking a buying frenzy.

“People are naturally drawn to things they see moving and they’ve seen gold have an astonishing rally,” said Chris Beauchamp, chief market analyst at IG. “It’s bound to lead to an ignition of interest.”

He added that while gold has beneficial investment properties, the metal’s ability to hold its value is overstated, particularly in the short term. Gold’s position in the market notably shifted after former US president Richard Nixon decided to end direct dollar convertibility to gold in 1971. Put simply, countries no longer fixed their currencies to a specified amount of the precious metal.

“The gold standard is still invoked to suggest the metal is some kind of totemic asset we should have because it’s a fixed store of value. It’s not,” concluded Beauchamp.

Kenneth Lamont, a principal in Morningstar’s Manager Research Department, reiterated this message, also drawing comparisons between gold and crypto. While both are limited in supply, they are both “incredibly volatile”, he stressed.

“If you’re using either crypto or gold to buy something, it might be 30% less from one day to the next. It’s not actually a good store of value in the short term.”

While gold is much more established than bitcoin, and it has historically performed well over the long term, analysts stress that the unpredictability of both assets means the death knell is not yet ringing for fiat currencies.

Whether bullion’s price will continue to climb in the immediate future is a guessing game. Even so, given the precarious nature of global politics, it seems the metal may still have further to run.

Federal Reserve Chair Jerome Powell pushed back against political pressure on the US central bank on Wednesday and defended its independence, urging the next chair to “stay out of elected politics”. Markets, however, appeared unconvinced, accelerating a sell-off in the dollar as gold and silver hit fresh record highs.

“Don’t get pulled into elected politics. Don’t do it,” Powell told reporters.

The reaction followed the Federal Reserve’s latest decision to leave interest rates unchanged in a range between 3.5% and 3.75%.

Asked whether the Fed was drawing any macroeconomic signal from the explosive rally in precious metals, Powell played down its significance.

“We don’t take much message macroeconomically,” Powell said. “The argument that we are losing credibility is simply not the case. If you look at where inflation expectations are, our credibility is right where it needs to be.”

He highlighted that the Fed does not “get spun up over particular asset price changes”, although it continues to monitor markets closely.

Markets react

The market reaction sharply contradicted Powell’s message.

Gold jumped to $5,500 per ounce, setting a new all-time high, while silver climbed above $117 per ounce.

Gold is now up over 20% this month, on track for its strongest monthly performance since January 1980.

Silver’s gains have been even more dramatic, with prices already up around 55% this month — the strongest monthly rise on record.

Meanwhile, the US dollar index, which tracks the greenback against a basket of major currencies, fell to levels last seen four years ago.

“The next couple of days will show whether investors have concluded that the dollar needs to go lower and that today’s bounce is a selling opportunity,” said James Knightley, chief economist at ING.

The dollar is now more than 10% below its 2025 highs, weighed down by persistent macro headwinds, including global central bank diversification away from US assets, widening fiscal deficits, recurring questions over Fed independence, and expectations of further policy easing.

‘Is gold the new bitcoin?’

Veteran Wall Street economist Ed Yardeni linked the rally to politics, suggesting its sustained popularity could make “gold the new bitcoin”.

Yardeni argued that US President Donald Trump, a vocal supporter of cryptocurrencies, appears to be inadvertently fuelling the rise in gold prices.

On Tuesday, Trump said “the dollar is doing great” when asked whether the currency had fallen too much, signalling he is comfortable with a weaker greenback.

“A weaker dollar may put upward pressure on US inflation, which would also boost the price of gold,” Yardeni said.

Commodities surge beyond gold and silver

The rally has spread across the broader commodities market.

Platinum climbed above $2,900 per ounce for the first time on record this week and is already up 33% this month. Palladium, which benefits from stronger industrial demand, rose to a four-year high and is up more than 22% year to date.

Copper also surged, hitting a record $6.30 per pound on Thursday.

Across commodity markets, investors are increasingly positioning for prolonged dollar weakness, amid perceptions that US institutions are willing to tolerate — or quietly accept — the shift.

Euro stronger, equities mixed

In Europe, the euro traded near $1.1950, edging lower after briefly breaking above $1.20 earlier in the week following Trump’s comments.

The single currency has now risen for three consecutive months against the dollar and is up around 15% year on year.

European equities were mixed. France’s CAC 40 and Italy’s FTSE MIB gained around 0.5%, while Germany’s DAX fell over 1%.

Frankfurt’s losses were led by SAP, which slid 16% — its biggest one-day drop since October 2020 — after weaker-than-expected cloud sales and a cut to 2026 revenue guidance outweighed in-line fourth-quarter results.