In a first, gold breaches $5k/Oz, silver $110/Oz

Gold smashed through the $5,000-an-ounce threshold for the first time, extending a breakneck rally fuelled by US President Donald Trump's reshaping of international relations and investor flight from sovereign bonds and currencies.

Bullion jumped as much as 2.5% to more than $5,111 on Monday, as dollar weakness reinforced demand. A gauge of the greenback has fallen almost 2% in six sessions, with speculation that the US may assist Japan in efforts to boost the yen adding to worries over Federal Reserve independence and Trump's erratic policy making. Silver also spiked to a record above $110 an ounce.

Gold's dramatic gains drive home bullion's historic role as a gauge of fear in markets. Fresh from its best annual performance since 1979, it's up about 18% 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. In recent weeks, the Trump administration's actions - attacks on the Fed, threats to annex Greenland, military intervention in Venezuela - have also spooked markets.

"Gold is the inverse of confidence," said Max Belmont, a portfolio manager at First Eagle Investment Management, which holds billions of dollars worth of bullion. "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 strategist 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."

Still, bullion's gains have been rapid enough to give some investors pause for thought. A majority of fund managers thought gold was the most crowded trade in a Bank of America Corp survey conducted before escalations over Greenland earlier this month. Some 45% of respondents thought gold was overvalued, tying with May 2025 as the highest share on record.

Silver has seen an even more rapid advance, supported by strong investment demand, including from retail buyers from Shanghai to Istanbul. This debasement trade reached its zenith in late 2025, when prominent investors like Citadel's CEO 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 US 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. bloomberg