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Gold shattered the $5,000 per troy ounce barrier on Monday, January 26, marking its first breach of this psychological threshold as investors scrambled for safety following President Donald Trump’s threats to invade Greenland. The precious metal, now valued at €4,217 per troy ounce, has nearly doubled from its price a year ago in what analysts describe as its most dramatic rally since the 1970s.
Geopolitical Tensions Drive Record Rally
The surge accelerated after Trump’s recent ultimatum to annex Greenland and his threats to impose tariffs on nations opposing the proposal, creating severe strain in US-EU relations. The Greenland dispute followed closely on the heels of US military intervention in Venezuela, where special forces captured and removed former president Nicolas Maduro from office.
Thomas Kulp, an analyst at Frankfurt-based DZ Bank, identified these events as critical catalysts. In a client note, he pointed to “the search for a safe haven” as the primary driver in gold markets, specifically citing the Venezuela attack, Iran’s suppression of mass protests, and the Greenland confrontation. The bank now projects gold’s upward trajectory will persist through 2026.
Dollar Weakness Amplifies Gold Appeal
The precious metal posted its strongest weekly performance in nearly two decades last week, while the US dollar suffered its worst week since May 2025. The greenback declined 9.5% against major currencies in 2025, marking its steepest annual drop since 2017.
Fawad Razaqzada, market analyst at Forex.com, characterized gold’s recent movements as “textbook safe-haven behaviour,” noting that “confidence in the dollar and bonds look a bit shaky.” The dollar’s weakness makes gold more affordable for holders of other currencies, creating additional upward pressure on prices.
Institutional Investors Join the Rush
Beyond traditional safe-haven buyers, new investor categories are entering the gold market. Analysts report increased demand for gold-backed exchange-traded funds (ETFs), drawing participants from diverse investment backgrounds. This broadening investor base has added momentum to the rally that began in 2019, when gold traded at just $1,280 per troy ounce.
Dan Coatsworth, head of markets at AJ Bell, suggested investors remain “reluctant to let go of their safety blanket, just in case Donald Trump woke up with another controversial idea.” The comment underscores the persistent uncertainty driving allocation decisions across European and global markets.
What’s Next
DZ Bank’s analysts see a “deterioration in global geopolitical conditions” continuing to push both private and institutional investors toward higher gold allocations in their portfolios. With the Japanese yen also losing appeal amid concerns over Japan’s fiscal position, and speculation mounting about potential Japanese currency intervention that could further pressure the dollar, gold’s ascent may have room to run. The metal’s remarkable journey from $1,280 to $5,000 in just over six years reflects fundamental shifts in global financial stability perceptions.
Sources: Greekreporter, Dw, Euronews
