Gold Approaches 5,000, Signaling Rising Economic Risks

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[Figure 1: Gold Price Chart]

The recent surge in precious metals highlights a broader reconstruction of the global order and a growing crisis of confidence in fiat currencies. Gold prices are nearing USD 5,000, while silver has broken above USD 100. Behind this move lies an acceleration in U.S. geopolitical actions including military involvement in Venezuela, expanded sanctions on Iran, claims over Greenland‘s sovereignty, and NATO tariff threats. These actions are increasingly undermining the dollar’s seigniorage system.

At the same time, expectations of fiscal expansion are lifting medium- to long-term inflation outlooks, prompting capital to exit long-duration bonds and flow into scarce, hard assets.

As global geopolitics are reshaped and fiscal sustainability deteriorates, we remain constructive on the long-term value of precious metals with strong monetary attributes, particularly gold and silver. However, as this consensus forms, the broader implications for asset allocation deserve closer attention:

• Declining currency credibility and a rising valuation anchor require a repricing of supply-constrained real assets and core equity holdings.

• Structural supply-demand imbalances in commodities are likely to spill over into AI and defense sectors, making the global investment cycle after 2026 increasingly resource-intensive.

Based on this backdrop, we analyze the situation from three perspectives.

• I. Short-Term Catalysts Behind the Precious Metals Rally

Geopolitical Escalation Erodes Dollar Credibility

U.S. actions ranging from military involvement in Venezuela, intensified sanctions on Iran, sovereignty claims over Greenland, to abrupt retreats following NATO tariff threats are undermining the post-World War II rules-based order. The U.S. has stepped back from providing global public goods, while imposing tariffs that effectively act as a second layer of taxation. This weakens the dollars seigniorage power and highlights that its reserve currency status may suppress U.S. Treasury yields by 50–100 basis points. As a result, incentives for foreign holders to reduce U.S. Treasury exposure are increasing, potentially at the cost of a declining dollar hegemony.

Rising Fiscal Expansion Expectations Fuel Inflation

At the Davos Forum, French President Emmanuel Macron called for increased European defense investment, while Canadas Mark Carney indicated defense spending could double by 2030. In Japan, Sanae Takaichi has proposed temporarily suspending the food tax, potentially expanding GDP by 0.8%. As long-term bond yields rise, capital continues to rotate out of fiat assets and into scarce stores of value.

• II. Medium- to Long-Term Allocation Value and the Repricing of Valuation Anchors

Gold still has room to run. While allocation levels have increased, they remain multiples below post-WWII peak levels. The current price action serves as a warning against relying on outdated valuation anchors. When gold is used as the benchmark, many commodities such as copper and oil, as well as equity indices, appear to have depreciated in real terms. As fiat currencies become unanchored, the premium on scarce assets continues to shift higher. Ongoing fiscal expansion and rapid growth in total money supply further reinforce this logic.

• III. Increasing Exposure to Supply-Constrained Core Assets

The three dominant trends from Q4 last year remain firmly in place: global order restructuring, fiat currency erosion, and the AI revolution.

• Analysts View

Short-term geopolitical volatility may trigger temporary pullbacks, but the medium- to long-term trend remains intact. Markets are now focused on the January 29 FOMC meeting. While a rate cut this month is unlikely, market expectations still center on two to three rate cuts this year. Over the long run, this remains supportive for precious metals. Investors should therefore seek well-timed entry points rather than chasing prices higher.

[Figure 2: Gold H1 Hourly Chart]

At the time of writing, gold has broken above the 5,070 level and may continue to challenge 5,100. This move has been driven primarily by renewed negotiation tensions between Trump and Iran, which have heightened market fear and pushed gold to fresh highs. Going forward, price action will remain highly sensitive to political developments.

At the start of 2026, gold has repeatedly set new record highs, decisively entering the zone above USD 5,000. While this raises the potential upside ceiling for year-end targets, it also reflects a highly unstable macro environment with elevated volatility. Trading strategies should therefore carefully balance both economic data and event-driven risks to navigate the market effectively.

Risk Disclaimer:

The views, analyses, research, prices, or other information provided above are for general market commentary only and do not represent the position of this platform. All readers assume full responsibility for their own investment risks. Please trade with caution.