Gold breaks the $5,000 psychological barrier amid safe-haven demand

The Gold futures contract (GCG26) has surpassed the prominent $5,000 psychological level for the first time. The precious metal is rallying due to a confluence of factors, most notably safe-haven demand from investors, mounting concerns regarding the Federal Reserve’s independence, and a weakening US dollar.

Gold futures have rallied significantly, driven by safe-haven demand amidst heightened geopolitical uncertainty. A combination of factors is positively impacting prices, including global instability, growing scepticism regarding the US dollar, and expectations of monetary easing for the current year. Consequently, gold has accumulated a return of approximately 82% over the past twelve months.

Regarding the latest geopolitical developments, US President Donald Trump declared over the weekend that he would impose a 100% tariff on Canada should it continue to pursue a trade deal with China. Gold prices typically rise during periods of escalating geopolitical, commercial, or economic tension as investors seek to hedge against volatility.

Concurrently, the Federal Reserve is set to determine its monetary policy this week. According to the CME FedWatch Tool, probabilities indicate the central bank will maintain interest rates at the current level of 3.75%. However, market participants are closely monitoring how pressure from the White House on Federal Open Market Committee (FOMC) members might influence their future policy stance, increasing market uncertainty.

In the currency markets, the US Dollar Index (DXY) fell by 0.42% to 97.05 points, its lowest level since September 2025. The dollar is facing increasing downward pressure due to several factors. Two of the most significant are rising global distrust in the currency—stemming from dissatisfaction with current US foreign policy implementation—and speculation regarding a potential intervention in the Japanese yen, which has appreciated by 2.6% over the last three days. A weaker dollar generally stimulates demand for gold, as the metal becomes more affordable for holders of other currencies.