Gold has breached the $5,000 level for the first time in history, extending its record-breaking rally as safe-haven demand strengthened amid global uncertainties. On January 26, 2025, Gold trades close to $5,107, nearly 2.3% higher than the previous close.
Over the last 12 months, gold has been up by 85%, while the YTD return is 18%. Analysts predict further gains for gold, seeing it as a strategic hedge due to heightened geopolitical risks associated with the current US administration’s foreign policy shifts and an increasing movement toward de-dollarisation.
Just weeks after announcing a year-end estimate of $4,900 per ounce, Goldman Sachs said that it has raised its December 2026 price target to $5,400 per ounce.
Bull Run in Gold
The recent increase in gold prices is attributed to ongoing geopolitical risks and a weaker dollar, with investors particularly concerned about tensions in the Middle East and disputes between the US and Europe regarding Greenland.
US Dollar index was approaching $100 but has slipped back to $97.11 after falling over 2.3% in the last 5 days. A weaker dollar signals strength in gold prices. Analysts suggest that de-dollarization is unfolding in several central bank forex reserves, where the share of USD has slid to a two-decade low.
Meanwhile, President Trump has dismissed military intervention in Greenland, insisting instead that EU countries ‘handover’ the territory to avoid increased tariffs. This geopolitical uncertainty is driving investors towards safer assets like gold.
Concerns are rising about Europe potentially weaponizing its significant US asset holdings, which may adversely affect the US dollar. Analysts at Deutsche Bank have raised questions about the likelihood of European investors selling off U.S. assets, especially since Europe accounted for 80% of foreign purchases of U.S. Treasuries from April to November last year, according to Citi’s portfolio data.
New Triggers
The US Federal Reserve is expected to maintain its interest rates unchanged this week, due to a strong economy. However, markets are considering two possible rate cuts later this year, which could lead to an increase in gold prices.
Apart from the new triggers, the causes for the bull run in gold since 2022 remain relevant today. From central bank demand for the yellow metal to the growing geopolitical risks, the tailwinds that existed in 2025 are relevant today.