Good morning, and welcome to our rolling coverage of business, financial markets, and the global economy. In a dramatic surge, gold has broken through the $5,000 per ounce barrier for the first time ever, as investors flock to safe-haven assets in response to mounting geopolitical and economic uncertainties.
Gold and Silver Soar to Unprecedented Heights
Spot gold climbed nearly 2% to reach an all-time high of $5,092.71 per ounce, and is currently trading around $5,079. This marks a continuation of its remarkable rally, having gained 64% in value last year—its largest annual increase since 1979. The precious metal's appeal has been bolstered by a weaker US dollar, interest rate cuts, robust central bank purchasing, and record inflows into exchange-traded funds. So far this year, the gold price has risen by approximately 17%, underscoring its status as a preferred refuge during turbulent times.
Silver prices are also on a steep upward trajectory, following their breakthrough of $100 an ounce on Friday. Spot silver surged 4.5% to $107.6 per ounce, after hitting a record peak of $109.44. This dual surge in precious metals highlights a broad-based flight to safety among investors.
Drivers of the Safe-Haven Rush
The renewed demand for gold and silver is primarily fueled by fears surrounding US trade policies and domestic political instability. Former President Donald Trump has threatened Canada with 100% tariffs if the country pursues a deal with China, adding to ongoing trade tensions. Additionally, there is a looming risk of a second US government shutdown in recent months, as Democrats have threatened funding for the Department of Homeland Security following a weekend shooting incident in Minneapolis involving federal immigration agents.
Ipek Ozkardeskaya, a senior analyst at Swissquote, noted the peculiar nature of this market movement. "What's striking is that this renewed flight to safe havens is unfolding without any major geopolitical headline this morning," she said. "There has been no new escalation over the weekend—no fresh breach of international law, no invasion, no immediate military threat. The US did, however, threaten Canada with 100% tariffs, after Mark Carney approached China last week, defying the White House—a reminder that trade tensions remain alive and well. Beyond that, the news flow is thin. Yet the bid for precious metals suggests that market stress is far from over."
Broader Market Implications and Global Context
Last week's events contributed to the heightened market anxiety, including escalations and partial de-escalations in US-EU trade tensions, media attention on global forums, and renewed concerns over Japan's public debt. The latter triggered a sharp sell-off in Japanese government bonds, pushing some long-dated yields to multi-decade or record highs. The yen spiked on Friday and has risen by 1% to 154.06 per dollar today, sparking speculation about potential intervention by authorities. Reports indicate that the New York Federal Reserve conducted rate checks on Friday, raising the possibility of joint US-Japanese action.
Since Sanae Takaichi became Japan's prime minister in October, worries have grown that her fiscal spending plans and tax cuts could exacerbate the country's debt burden, which exceeds double its economic output. She has called a snap election for 8 February, adding to the political uncertainty. Reflecting these tensions, the Japanese stock market fell by 1.79% today, while South Korea's Kospi index declined by 0.8%.
Today's Economic Agenda
Key data releases to watch include:
- 9am GMT: Germany Ifo business climate index for January
- 1.30pm GMT: US Durable goods orders for November
These indicators will provide further insight into the health of major economies and could influence market sentiment in the coming sessions.
