Gold surged past $5,000 an ounce for the first time on Monday, reaching as high as $5,110, as investors fled to safe-haven assets amid escalating turmoil triggered by US President Donald Trump's tariff threats and mounting fears of a US government shutdown. Silver also broke records, climbing above $100 an ounce to hit $109.
The precious metals rally accelerated after Trump threatened Canada with 100% tariffs over its engagement with China. On Saturday, Trump posted on Truth Social: «China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life. If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the [US].»
Canadian Prime Minister Mark Carney responded by clarifying that Canada's recent agreement with China merely cuts tariffs on a few sectors. Carney stated Canada has no intention of pursuing a free trade deal with China or any other nonmarket economy.
Shutdown fears fuel uncertainty
Fears of another US government shutdown intensified after Democrats threatened funding for the Department of Homeland Security. The threat followed a weekend shooting in Minneapolis where federal immigration agents shot a man, raising domestic political tensions.
The crisis marks the second potential shutdown in months, adding to market stress. Ipek Ozkardeskaya, senior analyst at Swissquote, noted: «What's striking is that this renewed flight to safe havens is unfolding without any major geopolitical headline this morning. [...] Yet the bid for precious metals suggests that market stress is far from over.»
Historic rally continues
Gold has now gained 64% in 2025 – its biggest annual increase since 1979 – and climbed more than 18% this year alone. The surge represents a nearly 90% increase since Trump's inauguration just over a year ago.
Steve Miller, investment strategy adviser at Australian asset manager GSFM, compared the current run to historic market upheavals: «The second oil shock and the inflation scare in the late '70s, early '80s would be the last time I remember when gold did this – and that was before my time in markets,» said Miller, who has four decades of experience in financial markets.
The rally was further fueled by the Japanese yen spiking 1% to 154.06 per dollar on Monday. The Federal Reserve conducted rate checks on Friday, raising speculation of potential joint US-Japanese intervention to halt the yen's slide. Miller suggested this indicated the Trump administration views the dollar as too strong: «If the Federal Reserve is doing this on behalf of the US Treasury, they're only doing it for one reason: they think the US dollar is too high,»
Broader market impact
Japanese stocks fell 1.79% on Monday, while South Korea's Kospi dropped 0.8%. Japan's Prime Minister Sanae Takaichi warned of action on "highly abnormal movements" in markets, potentially with US assistance.
Gold's appeal has been boosted by a weaker dollar, interest rate cuts, central bank buying from countries including China, and record inflows into exchange-traded funds. Analysts forecast prices could peak around $5,500 later this year, though periodic pullbacks are expected. Miller added: «I think it could well have some further upside. But just as good is it might insulate you from turmoil in other asset classes.»
Note: This article was created with Artificial Intelligence (AI).
