Gold smashed the US$5,000-an-ounce threshold and pushed even higher, extending a breakneck rally fuelled by

U.S. President Donald Trump ’s reshaping of international relations and investor flight from sovereign bonds and currencies.

Bullion jumped as much as 2.5 per cent to more than US$5,111 on Monday, as dollar weakness reinforced demand. A gauge of the greenback has fallen almost two per cent in six sessions, with speculation that the U.S. may assist Japan in efforts to boost the yen adding to worries over

United States Federal Reserve independence and Trump’s erratic policy making. Silver also spiked to a record above US$110 an ounce, gaining for a third day.

Gold’s dramatic gains – the metal has more than doubled over the last two years – drives home bullion’s historic role as a gauge of fear in markets. Fresh from its best annual performance since 1979, it’s risen nearly 18 per cent so far this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasuries. A massive selloff in the Japanese bond market last week is the latest example of investors rejecting heavy fiscal spending.

Even as the metal breaches a key psychological level, options traders are bracing for more upside in a red-hot market where few wish to stand against the wave. The one-month risk reversal, a gauge of sentiment and positioning, spiked to the highest level since April 2024.

“While risk reversals typically turn positive during strong gold rallies, the current move stands out for its size and persistence,” said Christopher Wong, a strategist from Oversea-Chinese Banking Corp Ltd. This shows that the options market is “positioning for more than just a short-term price jump, consistent with gold carrying a geopolitical and confidence premium,” he said.

In recent weeks, the Trump administration’s actions — attacks on the Fed, threats to annex Greenland, military intervention in Venezuela — have also spooked markets. For investors looking to navigate this uncertainty, the haven appeal of gold has rarely been more attractive.

Trump also threatened Canada over the weekend with 100 per cent tariffs

 on all its exports to the U.S. if Ottawa makes a trade deal with China, escalating bilateral tensions. Meanwhile, political uncertainties within the U.S. remain high as Senate Democratic leader Chuck Schumer vowed to block a massive spending package unless Republicans strip funding for the Department of Homeland Security — increasing the risk of a partial government shutdown.

“Gold is the inverse of confidence,” said Max Belmont, a portfolio manager at First Eagle Investment Management. “It’s a hedge against unexpected bouts of inflation, unanticipated drawdowns in the market, flare-ups in geopolitical risk.”

Swelling public debt in advanced economies has become another key pillar of gold’s rally. Some long-term investors, convinced that inflation will become the only path to state solvency, have piled into gold as a way to preserve purchasing power.

“People have become a lot more worried about the long-term debt trajectory over the past three years,” said John Reade, chief strategise` at the

World Gold Council. “The place that I have found the debasement and debt arguments come through the most has been with family offices. They’re thinking about generational wealth protection, rather than the short term.”

This debasement trade reached its zenith in late 2025, when prominent investors like Citadel’s chief executive Ken Griffin and Bridgewater Associates Founder Ray Dalio pointed to gold’s rise as a warning signal.

Investors are now waiting for Trump’s pick for the next Fed chair after the U.S. president said he has finished interviewing candidates, reiterating that he has someone in mind for the job. A more dovish chair would increase bets on further interest-rate cuts this year — a positive for non-yielding bullion — after three successive reductions.

Gold’s appeal is showing up in positioning data. Hedge funds and other large speculators increased net-long positions in the metal to the highest in 16 weeks for the week to Jan. 20, according to U.S. government figures.

Meanwhile, silver’s advance has been supported by strong investment demand, including from retail buyers from Shanghai to Istanbul. At the same time, investors are also waiting for clarity over potential US trade tariffs.

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Gold rose 2.1 per cent to US$5,093.87 an ounce as of 4:41 p.m. in Singapore. Silver advanced six per cent to US$109.42. Platinum climbed to a record, and palladium also rose. The Bloomberg Dollar Spot Index was down 0.4 per cent after losing 1.6 per cent last week.