Gold (GC=F) continued to rise on Monday after breaking above $5,000 an ounce earlier than Wall Street expected. Futures hit a key milestone on Sunday while silver (SI=F) also rose one point beyond $115, raising questions about the dizzying speed of the rally in precious metals.
The rise in gold has become a feature of the “debasement trade”, with investors buying assets to protect against eroding purchasing power amid soaring government debt around the world.
Silver moved even more aggressively, posting an almost parabolic rise and up 50% year-to-date.
“The rise in the prices of precious metals is breathtaking and deeply frightening,” Robin Brooks, a senior fellow at the Brookings Institution, wrote on Sunday, noting that the rise in gold prices is “part of something much bigger.”
“We are at the beginning of a global debt crisis, with markets increasingly fearful that governments will try to inflate debt out of control,” Brooks wrote.
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Brooks noted that while the US dollar (DXY.NY-B) remained relatively stable during the second half of last year, it started the year on a downward trajectory. The dollar weakened against major currencies on Monday, hitting a four-month low amid speculation that the United States may coordinate with Japan to support the yen.
“A falling dollar will greatly increase the rise in gold prices and debasement trade because it will boost the purchasing power of non-dollar buyers,” Brooks wrote.
Goldman Sachs recently raised its year-end price target from $4,900 to $5,400, noting increased participation from private investors looking to diversify portfolios and protect wealth.
“We see the risks to our improved gold price forecast as two-sided but still significantly skewed to the upside as private sector investors may diversify further on lingering global policy uncertainty,” the analysts said.
Bullion has turned higher on every major geopolitical event this year, including the US capture of Venezuelan leader Nicolás Maduro and President Trump’s threat of tariffs in pursuit of Greenland.
The precious metal is up more than 16% year-to-date, after a 65% increase in 2025.
Although foreign central bank demand for gold has been strong amid reduced exposure to US Treasuries, Brooks argued that it does not explain the massive rise in gold prices so far this year.
“The fact that this is a broad bubble across all precious metals argues for central banks to be a key driver,” Brooks wrote.
Elsewhere in the metals complex, platinum (PL=F) also touched new highs, gaining more than 40% so far this year.