Gold Hits $5,000 as Investors Flee the Dollar

Steven Højlund

Writer

January 29, 2026
7:49 am

Gold prices have soared nearly 90 percent since Donald Trump returned to the White House just over a year ago, reaching a record high of $5,000 per ounce. Experts express surprise at the continued climb despite strong economies and attractive returns from alternative investments like stocks and bonds.

Expert Surprised by Gold’s Continued Rally

The precious metal recently hit a milestone that has left market watchers scratching their heads. According to The Guardian, gold surpassed $5,000 per ounce for the first time, translating to roughly 31,403 Danish kroner for about 31 grams of gold.

Jens Nærvig Pedersen, chief analyst at Danske Bank, admits the trend catches him off guard. He acknowledges that while geopolitical uncertainty with wars, crises, and trade conflicts typically drives investors toward gold as a safe haven, something unusual is happening this time.

Surprisingly, strong economic conditions in both the United States and Europe should theoretically pull investors away from gold. Stock markets are climbing, economies are growing, and bonds offer decent returns. In such environments, investing in stocks and other assets usually becomes more attractive than holding gold.

A Shift Away from the Dollar

Historically, the US dollar served as another safe haven during uncertain times. But Pedersen points to a fundamental shift in how investors view the American currency over the past year.

As Trump’s trade war intensified, investors broadly moved away from US investments. Even earlier in January, when Trump threatened Denmark and seven other European countries with additional tariffs, a similar movement emerged, though it proved short-lived and less pronounced.

When the dollar loses its status as a reliable safe haven, gold’s position strengthens. This shift helps explain why gold continues performing exceptionally well despite attractive alternatives elsewhere in the market.

Limited Supply Drives Prices Higher

Unlike most commodities or investments, extracting gold from the earth becomes increasingly difficult. The supply remains essentially fixed at what already exists. When demand rises against this constrained supply, prices can spike quickly.

In fact, Danske Bank recently recommended that investing customers allocate up to five percent of their portfolios to gold. This marked the first time the bank made such a recommendation.

Silver Prices Also Skyrocket

Gold isn’t the only precious metal experiencing dramatic price increases. Silver has also set records, surging 147 percent last year alone according to Reuters.

Philip Jagd, head of equities at Sampension, has long associated rising silver prices with growing global political uncertainty. However, he suggests the latest movement stems from different factors, especially since Trump backed away from some of his more extreme international positions.

Jagd points to a speculative trend creating an explosion in private investor appetite for the shiny metal. Meanwhile, underlying concerns about inflation persist. He even compared the demand for gold to the toilet paper hoarding witnessed during the coronavirus pandemic.

Market Dynamics and Future Outlook

At the same time, recent developments have added complexity to the picture. Tuesday evening saw gold experience its sharpest daily decline in five years, falling 5.6 percent to approximately $4,111 per ounce. This drop was driven by profit-taking, a strengthening dollar, and reduced anxiety over the US-China trade war after Trump suggested things would likely work out well with China.

Despite this correction, gold has still risen over 60 percent in 2025 alone and more than 110 percent over the past two years. Central banks have dominated gold purchases since 2022, absorbing sales from Western investors even as interest rates climbed.

Diverging Expert Predictions

Analysts remain split on where prices head from here. WisdomTree forecasts potentially much higher gold prices in 2026, with a consensus scenario of $3,850 per ounce in the first quarter. In a debasement trade scenario where the dollar weakens through Trump’s policies, prices could reach $5,355.

Goldman Sachs predicts $4,000 in 2026, while Citigroup warns of a potential drop below $3,000. The five-point risk list from analysts includes trade uncertainty, rising government debt particularly in the United States, geopolitical risks, institutional quality concerns, and ambiguous dollar policy.

In a bull scenario featuring tariff shocks, interest rate cuts, and inflation, prices could hit $4,475. A bear scenario with falling inflation and a strong dollar might bring prices down to $2,700, still above 2025 levels.

Structural Factors Support Continued Demand

Several structural factors continue supporting gold even after recent corrections. Stagflation risks, fiscal policy dominance, concerns about central bank independence, and geopolitical tensions all play roles.

China’s official and private purchases represent a particularly important factor. Chinese buyers have turned to gold as an alternative to the struggling real estate market. Meanwhile, Section 232 investigations in the United States regarding critical minerals like silver could affect trade flows and prices between London and COMEX markets.

Obviously, the extraordinary circumstances surrounding gold’s performance reflect deeper uncertainties in the global economic system. Whether prices continue climbing or experience further corrections remains to be seen, but the fundamental drivers pushing investors toward precious metals show little sign of disappearing.