Gold has surged beyond the US$5,000-an-ounce mark for the first time, extending a powerful rally as investors seek shelter from rising geopolitical uncertainty, currency instability, and growing concerns over global debt.

Bullion climbed as much as 2.5% at the start of the week, pushing prices above US$5,110 an ounce. The advance has been supported by renewed weakness in the US dollar, which has dropped nearly 2% over the past six sessions. Market unease has intensified amid speculation that Washington may step in to support Japan’s efforts to strengthen the yen, adding to broader concerns about Federal Reserve independence and unpredictable policy signals from the Trump administration. Silver followed gold higher, also reaching a fresh record above US$110 an ounce.

Gold’s sharp rise reinforces its long-standing role as a barometer of market anxiety. After delivering its strongest annual performance since 1979 last year, the metal is already up around 18% so far this year. Much of the demand has been driven by what investors describe as the “debasement trade” — a shift away from fiat currencies and government bonds as confidence in traditional stores of value weakens.

Recent turmoil in sovereign debt markets has added momentum to the move. A heavy sell-off in Japanese government bonds last week highlighted growing investor resistance to large-scale fiscal expansion, while swelling public debt across developed economies has further strengthened the case for gold as a long-term hedge.

At the same time, escalating geopolitical risks have unsettled markets. Tensions stemming from the Trump administration’s clashes with the Federal Reserve, aggressive foreign policy rhetoric, and military actions abroad have contributed to a more defensive investment environment.

“Gold tends to rise when confidence falls,” said Max Belmont, a portfolio manager at First Eagle Investment Management. “It provides protection against inflation surprises, market drawdowns, and sudden geopolitical shocks.”

Concerns over government debt sustainability are also playing a central role in gold’s appeal. Some long-term investors believe that inflation may ultimately become the preferred solution to mounting debt burdens, prompting them to increase allocations to gold as a means of preserving purchasing power.

“Worries about long-term debt have grown significantly over the past few years,” said John Reade, chief strategist at the World Gold Council. “We see this most clearly among family offices, which are focused on protecting wealth across generations rather than chasing short-term returns.”

Despite gold’s strong momentum, the speed of the rally has raised questions about positioning. A recent Bank of America survey showed that fund managers viewed gold as the most crowded trade, with nearly half of respondents suggesting the metal is overvalued — matching the highest reading on record.

Silver has experienced an even sharper rise, underpinned by strong investment demand, including significant participation from retail investors across Asia and emerging markets.

Attention is now turning to the Federal Reserve’s leadership outlook. Investors are awaiting President Trump’s nomination for the next Fed chair, a decision that could influence expectations for further interest-rate cuts this year. Lower rates would typically support non-yielding assets such as gold.

Central bank demand also remains a key pillar of support. Goldman Sachs estimates that official sector purchases could average around 60 tonnes per month this year, representing close to US$10 billion worth of metal at current prices. Much of this buying is believed to be unreported.

Poland’s central bank, the largest disclosed buyer globally, has recently approved plans to acquire an additional 150 tonnes of gold — more than the total reserves held by some major economies.

“Our priority is to build a resilient portfolio for uncertain geopolitical conditions,” said Artur Sobon, a member of Poland’s central bank management board. “Price considerations are secondary to stability and credibility.”

Market positioning data suggests enthusiasm for gold remains strong. Options markets are increasingly pricing in further upside, with sentiment indicators reaching their highest levels in nearly a year.

“The scale and persistence of this move stand out,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corporation. “It suggests investors are assigning a geopolitical and confidence premium to gold, rather than simply chasing a short-term rally.”

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.