To The Moon

Gold Tops $5,000 for First Time Ever: What's Next for Investors?

$XAU/USD(XAUUSD.FOREX)$   climbed to a fresh all-time high, crossing $5,000 an ounce on Monday and extending its record-breaking run as investors seek the safety of the yellow metal amid rising geopolitical tensions and global fiscal risks.

$XAG/USD(XAGUSD.FOREX)$  also rallied Monday, with spot prices jumping 4% to $108 per ounce, also benefiting from industrial demand.

What's driving the surge in precious metal prices, and what's next?

Geopolitical risk

The precious metal's surge comes as recent flashpoints from Greenland and Venezuela to the Middle East underscore higher geopolitical risk, reinforcing gold's appeal as a hedge against uncertainty.

"The recent further leg up in gold and silver prices has arrived on the back of geoeconomics issues related to Greenland," HSBC wrote in a note last week.

Weaker US dollar

The $USD Index(USDindex.FOREX)$   declines to near 97.00 at the start of the week, the lowest level seen in four months.

"While the US dollar remained relatively stable during the second half of last year, it has begun the year on a downward trajectory," wrote Robin Brooks, Senior Fellow at the Brookings Institution on Sunday.

"A falling dollar will super-charge the rise in gold prices and the debasement trade because it boosts the purchasing power of non-dollar buyers," Brooks wrote.

Additionally, large fiscal deficits and soaring global government debt are also driving this trend.

"We're at the start of a global debt crisis, with markets increasingly fearful governments will attempt to inflate away out-of-control debt," Brooks wrote.

What's Wall Street's outlook on gold?

Analysts at Union Bancaire Privée said Friday that prices have rallied on the back of sustained demand from both institutional and retail buyers.

"We anticipate that gold should enjoy another strong year, reflecting ongoing central bank and retail investment demand, with a year-end target price of USD 5,200 per ounce," UBP said.

Goldman Sachs recently raised its year-end price target from $4,900 to $5,400, arguing that hedges against global macro and policy risks have become "sticky," effectively lifting the starting point for gold prices this year.

Goldman Sachs sees the demand base for gold to have broadened beyond traditional channels. Western ETF holdings have climbed by about 500 tonnes since the start of 2025, while newer instruments used to hedge macro-policy risks, including physical purchases by high-net-worth families, have become an increasingly important source of demand.

Central bank purchases also remain robust. Goldman estimates central-bank purchases are now averaging around 60 tonnes a month, far above the pre-2022 average of 17 tonnes, with emerging-market central banks continuing to shift reserves into gold.

Investment Vehicles & Exposure 

For direct price exposure, physically backed ETFs remain the standard. For higher beta exposure, miners offer operating leverage.

However, investors need to remain cautious. Given the extreme sentiment and macro-driven volatility, price movements may continue to fluctuate. Risk management remains paramount; investors should utilize the current momentum to build positions while staying vigilant against potential short-term liquidity flushes.

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