What fuels the rally, the place will it finish? | EUROtoday

The worth of gold continues to hit new heights. On Monday (Jan 26) the metallic has now damaged by way of the milestone of $5,000 (€4,217) per troy ounce (31.1 grams)  for the primary time — an extra signal that buyers are flocking to what’s usually perceived to be a safe-haven asset amid rising geopolitical tensions.

Gold has been on a exceptional surge for the previous 12 months, having nearly doubled in worth since this time final yr.

It is on its largest rally because the Seventies and whereas the run has accelerated over the previous yr, its features have been notable since late early 2019 when it was valued at simply over $1,280 per troy ounce.

Why is it occurring?

The concept of gold being a protected and safe funding throughout occasions of uncertainty goes again many many years. Such uncertainty is clearly a driver within the present rally.

US President Donald Trump’s latest threats to invade and annex Greenland and to stage tariffs in opposition to those that opposed his proposals on the difficulty have brought on important stress to the US-EU relationship.

The Greenland threats got here shortly after the US intervention in Venezuela, which noticed former president Nicolas Maduro captured by US particular forces and faraway from workplace.

When gold was on its run in 2025, geopolitical considerations over the wars in Ukraine and Gaza have been an element. There have been additionally financial considerations, with doubts over Trump’s commerce tariffs, US authorities debt ranges and the longer term standing of the US greenback because the world’s most popular reserve foreign money.

Dan Coatsworth, head of markets at AJ Bell, instructed DW that gold’s persevering with rise was an indication that “investors were reluctant to let go of their safety blanket, just in case Donald Trump woke up with another controversial idea.”

In a observe to shoppers, analyst Thomas Kulp from the Frankfurt-based DZ Bank wrote “the search for a safe haven is the strongest price driver in the gold market,” citing the US assault on Venezuela, the suppression of mass protests in Iran, and the Greenland dispute.

Kulp sees a “deterioration in global geopolitical conditions” which usually leads each non-public and institutional buyers to “increase the gold allocation in their portfolio.” DZ Bank now expects the gold worth pattern to proceed in 2026.

Rising doubts about US greenback’s reserve foreign money standing

Last week was gold’s greatest in practically 20 years when it comes to worth will increase, whereas the US greenback had its worst week since May 2025. That underlines the connection between the worth of gold and the worth of the greenback.

Therefore, Fawad Razaqzada, market analyst at international trade on-line dealer Forex.com thinks that gold’s worth motion over thze previous few weeks has been “textbook safe-haven behaviour.”

“Underlying demand for protection is still there. Confidence in the dollar and bonds look a bit shaky,” he wrote on the corporate’s web site.

Dollar weak point itself can enhance purchases of gold and silver because it makes them cheaper to buy in different currencies. Uncertainty over the greenback additionally usually results in additional funding in gold, because the metallic is usually seen instead choice to the greenback.

Last yr, the US greenback had its steepest annual fall since 2017, declining by 9.5% in opposition to a basket of different main currencies.

Many analysts anticipate the pattern to proceed in 2026 amid uncertainty over the US financial system, investor diversification away from US belongings, and the potential of additional rate of interest cuts from the US Federal Reserve.

Another safe-haven foreign money, the Japanese yen, has additionally been shedding its luster in lots of buyers’ eyes, sliding amid worries over Japan’s fiscal place. There is concept that Japanese authorities might step in to prop up the foreign money — a market intervention that would put the US greenback beneath additional strain and assist push gold up furether.

New buyers

However, consultants additionally say gold’s present surge is tied to new buyers coming into the marketplace for the metallic. Several analysts say there was an increase in demand for gold-backed trade traded funds (ETFs), with an increasing number of buyers from a wider vary of backgrounds in search of to take a position.

“The fact that ETF demand has re-entered the scene so forcefully means that there are two forms of ‘aggressor’ bids for gold — from central banks and ETF investors,” wrote Deutsche Bank analysts in a observe to shoppers late final yr.

Gold has lengthy been bought by central banks all over the world however the brand new ETF demand has helped gasoline the present rally. The World Gold Council, a world commerce affiliation for the gold business, confirmed in late December 2025 that international gold ETF belongings beneath administration (AUM) doubled to an all-time excessive of $559 billion final yr.

The Council attributed the rise to rising safe-haven demand and so-called “momentum buying” — when buyers purchase because of the surging worth attracting consideration, and weak point within the US greenback.

2026 outlook

In the ultimate months of 2025, most analysts noticed gold persevering with its file run in 2026 and to date, they’re being confirmed proper.

The World Gold Council argues the 2026 outlook stays formed by geopolitical uncertainty and says a number of outcomes stay potential. If financial development slows and rates of interest fall additional, gold might see average features, the group says in its Gold Outlook 2026 report. However, amid a extra extreme downturn and rising geopolitical uncertainty might see larger features.

It cautions although {that a} profitable final result from Trump insurance policies might “accelerate economic growth and reduce geopolitical risk, leading to higher rates and a stronger US dollar, which would push gold lower.”

Edited by: Uwe Hessler