Gold soared above $5,000 US per ounce and silver surged to $110 per ounce on Monday due to various geopolitical tensions impacting the U.S. dollar. The demand for precious metals has significantly increased as investors look for secure investment options.
Daniela Hathorn, a senior market analyst at Capital.com, stated that as long as uncertainties persist around fiscal dominance, geopolitical fragmentation, and central bank credibility, precious metals are likely to remain crucial not only as hedges but also as alternatives.
The U.S. dollar experienced a decline to its lowest level since mid-November following a 1.5% rise in the Japanese yen in Europe. While the dollar had been strengthening against the yen recently, it took a sharp downturn after indications from officials in Japan and the U.S. about potential interventions to boost the yen.
The weakening dollar, currently at 153.88 Japanese yen compared to 155.01 yen, resulted in concerns about Japanese exporters benefiting from a weaker yen. Although Japanese finance officials did not confirm intervention plans, they acknowledged close coordination with the U.S. on currency fluctuations.
The yen’s rebound was attributed to speculation about potential intervention by Japanese authorities, possibly with U.S. collaboration, according to Ipek Ozkardeskaya, a senior analyst at Swissquote. Since Sanae Takaichi became Japan’s prime minister in October, the yen has been under constant pressure.
As the U.S. dollar declined against major currencies and market volatility increased, gold prices hit a record high, with gold reaching $5,089 US per ounce and silver climbing to $110 per ounce. Analysts like Chris Scicluna from Daiwa Capital Markets emphasized the significance of possible U.S. involvement in the Japanese currency market.
Global markets, including France’s CAC 40, Germany’s DAX, and Britain’s FTSE 100, experienced mixed movements on Monday. U.S. markets showed early gains, with the S&P 500 increasing by 0.4% and the Dow Jones Industrial Average rising by 192 points.
Market participants are closely monitoring upcoming earnings reports from global companies to assess the impact of recent U.S. tariff policies. President Donald Trump’s recent threats regarding tariffs on goods from Canada have also drawn attention, adding to market uncertainties.
Benchmark U.S. crude rose to $61.50 per barrel, while Brent crude, the international benchmark, increased to $65.55 per barrel on Monday.
