Gold surged above $5,000 per ounce, and silver reached $110 per ounce for the first time on Monday, driven by various geopolitical tensions impacting the U.S. dollar. Investors have turned to precious metals as a relatively secure investment choice, leading to a significant increase in their value in recent months.
Daniela Hathorn, a senior market analyst at Capital.com, highlighted that uncertainties surrounding fiscal dominance, geopolitical fragmentation, and central bank credibility are keeping precious metals at the forefront as both hedges and alternatives.
The U.S. dollar declined to its lowest level since mid-November following a 1.5% rise in the Japanese yen against the dollar in Europe. Although the dollar had previously strengthened against the yen, recent statements from officials in Japan and the U.S. indicating potential interventions to bolster the yen caused a sharp decline in the dollar’s value.
Despite no direct confirmation of intervention plans, Japanese finance officials mentioned close coordination with the U.S. regarding currency fluctuations. The yen’s rebound was attributed to speculation about potential joint actions by Japan and the U.S., according to Ipek Ozkardeskaya, a senior analyst at Swissquote.
Under the leadership of Prime Minister Sanae Takaichi, Japan’s yen has faced persistent pressure since October. Takaichi’s proposals to increase spending and reduce taxes ahead of an upcoming election have raised concerns about Japan’s already strained finances, pushing government bond yields to record levels. As the yen strengthened, Japan’s Nikkei index dropped by 1.75%.
As the U.S. dollar weakened against major currencies, gold reached a new high amid increased volatility. Gold prices surged by 2.1% to $5,089 per ounce, with a remarkable 17% gain in January, while silver climbed nearly 7% to $110 per ounce, marking a 50% rise for the month.
Chris Scicluna, an economist at Daiwa Capital Markets, pointed out the attractiveness of gold for central bank reserve diversification amid intervention discussions and broader economic events in the U.S. The potential U.S. involvement in the Japanese currency market was deemed significant and likely to impact Asian currencies as well.
Global stocks experienced mixed movements on Monday, with declines in European markets and positive openings in U.S. markets. Investors are closely monitoring upcoming earnings reports that may reveal the repercussions of recent U.S. tariff policies on global companies. President Donald Trump’s threats to impose tariffs on Canadian goods have added to market uncertainties, following earlier trade tensions with China and other countries.
Oil prices also saw modest gains, with benchmark U.S. crude rising to $61.50 per barrel and Brent crude increasing to $65.55 per barrel. The evolving global economic landscape continues to influence market dynamics across various sectors.
