Gold recorded a powerful start to the year, climbing by over 13% an ounce last month. This makes it its strongest monthly performance since the late 90s. The precious metal’s rally was driven by a mix of geopolitical uncertainty and shifting macroeconomic expectations.
Tensions rose after the United States reiterated its interest in acquiring Greenland, straining relations with Europe. At the same time, markets saw little change in the Federal Reserve’s policy outlook, reinforcing expectations of a weaker U.S. dollar and boosting demand for gold as a safe-haven asset.
Additional support came from concerns over a partial federal government shutdown in America, alongside increased buying interest from China. These factors extended the strong momentum gold built throughout last year. Gold entered the year trading at $4,313 an ounce and surged to a new all-time high of $5,598 an ounce by the month’s end. This is quite an increase, especially when compared with the price the metal closed 2025 with, at $4,882.1 an ounce.
Precious metals had already posted strong gains last year amid escalating geopolitical risks and rising doubts over the Federal Reserve’s independence. Safe-haven demand intensified following America’s military strike on Venezuela and the subsequent kidnapping of President Nicolás Maduro, while fears of a potential U.S. intervention in Iran pushed gold and related assets to fresh highs.
In January, the Federal Reserve held its benchmark interest rate steady, which was in line with market expectations. However, comments from Chair Jerome Powell highlighting risks linked to America’s debt outlook weighed on confidence in the greenback, leading to softer demand for the currency.
Geopolitical tensions remained elevated as America issued warnings to Iran over its nuclear program, while also threatening South Korea and Canada with additional trade tariffs. Although gold appears technically overbought and vulnerable to short-term corrections, persistent buying interest on price dips continues to support the broader upward trend.
Selling pressure in Japan’s bond market also supported higher gold prices, with rising government bond yields increasing borrowing costs and reducing the appeal of carry trade strategies. This, in turn, encouraged investors to rotate into safe-haven assets such as gold. This shift away from bonds and currencies has become an important driver of precious metals prices.
Ole Hansen, Saxo Capital’s Head of Commodity Strategy, stated in a recent interview that investors are increasingly moving out of government bonds and fiat currencies to hedge against the risk of currency depreciation. He added that the continued weakening of the U.S. dollar has reinforced this trend.
As gold continues to attract investor interest, entities like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) that extract this precious metal are likely to see their revenues continuing to rise.
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