Gold tops $US5000 for first time in history, Australian dollar jumps

The gold price topped $US5000 ($7233) for the first time in history on Monday, to extend a year-long rally driven by worries over the shock policymaking of US President Donald Trump.

The precious metal, known as a safe-haven asset in times of uncertainty, has now more than doubled in value since the November, 2024, election of the controversial US President.

On Monday it rose another 2 per cent to a record-breaking $US5093/oz and has now jumped 17 per cent in a dramatic start to 2026 punctuated by the US President’s threats to impose 100 per cent tariffs on Canada annex Greenland, and bomb Iran.

Demand for the metal has also been fuelled by the President’s insistence that the next US Federal Reserve chairman should be willing to lower interest rates to 1 per cent in the world’s largest economy.

The upheaval has also pushed silver 7 per cent higher to a record $US108/oz on Monday, amid a broad rally in assets viewed as a hedge against inflation and falling global trust in the US executive.

“On gold’s rise there are two major themes still playing out,” said Romano Sala Tenna, a portfolio manager at Katana Asset Management.

“The first is US de-dollarisation. That’s when investors sell US dollar assets and look to other assets like gold. The second is US dollar devaluation, as its government runs huge fiscal deficits and spends more, but only by adding debt.”

Mr Sala Tenna pointed to President Trump’s announcement that the US will increase its defence budget by 50 per cent, or $US500 billion in 2026, to take the total to $US1.5 trillion as an example of unfunded spending commitments that may prove inflationary.

“The bottom line is we think the trends of a falling [US] dollar and rotation out of US assets are intact,” he said. “So until we see a change in them, we think gold’s up trend can continue.”

US dollar loses value

The selling of the US dollar pushed the Australian dollar to a 16-month high versus the greenback to buy US69.3 cents on Monday morning.

The local dollar has now gained 9.5 per cent versus the US dollar since this time 12 months ago, when it bought just US63 cents.

The broader DXY Index, that tracks the performance of the US dollar versus a basket of six major currencies, has lost 9.6 per cent over the past 12 months.

Gold traditionally rises as the US dollar falls and the greenback’s recent weakness is widely regarded as a big driver of the metal’s ongoing ascent in 2026.

Traders have also been encouraged traders to sell the US dollar and buy gold by last week’s news reports that President Trump is now favouring, Rick Rieder, the chief investment officer at $US13 trillion asset management giant Blackrock for the role of the Fed chair in 2026.

Mr Rieder is widely considered as amenable to lowering interest rates to boost asset prices and is among four candidates to succeed Fed chair Jerome Powell when his term ends in May.

Gold’s outlook

According to Mr Sala Tenna, gold’s surging price doesn’t necessarily signal that buyers expect a crash in highly-valued financial assets like share market businesses linked to advances in artificial intelligence.

“Look, you can never count your chickens until they’re hatched,” he said. “So the future’s always uncertain, but we still like the technicals for gold and there’s nothing to suggest a fundamental fall for now.”

AMP’s chief economist Dr Shane Oliver also warned that gold may have run too hot, amid a spreading mania for the metal that even resulted in long queues of mum-and-dad buyers to buy physical gold outside Sydney’s ABC Bullion Store in 2025.

“The surge in geopolitical risk on the back of threats to US Fed independence saw gold and silver pushed to new record highs,” said Dr Oliver.

“While they are getting overbought and vulnerable to a correction the broad trend in both is likely to remain up as investors demand a hedge against geopolitical risks, worries that Trump will weaken the US Federal Reserve, risking higher inflation and associated downwards pressure on the $US dollar.”

RBA in focus, ASX miners rocket

For local investors, gold’s stunning rally has also propelled dozens of miners on the Australian Securities Exchange to record highs, although the local bourse was closed on Monday for the Australia Day Holiday.

Among the miners, dual New York Stock Exchange and ASX-listed Newmont Mining has surged 169.7 per cent in 12 months and now tops a $200 billion market value.

While West Australian miner Evolution Mining has rocketed 168 per cent to boast a $30 billion valuation larger than supermarkets giant Coles or national airline Qantas. Elsewhere, Northern Star has jumped 65 per cent in 12 months to a market value of $39.5 billion.

Mr Sala Tenna said investors should look to the relative share market laggards to find better value among the gold miners, on the assumption prices for the metal will remain robust through 2026.

“One that stands out for us is West African Resources,” he said. “Ok, you’ve got the jurisdiction risk in Burkina Faso, but we feel that’s overblown. In compensation, you’ve got free cashflow yields of 35 per cent, so it’s very cheap and you could get paid back in three years.”

The Perth-based fund manager added that he believes ASX-listed West Australian miner Vault Minerals is still cheap as higher gold prices mean it can profit more from the end of hedging agreements it had. “A high-cost producer in a high gold market tends to rip and we think Vault plays catch up,” he said.

According to the World Gold Council (WGC), investor demand for the metal accelerated to a record high over the third quarter of 2025 as central banks, institutions, and retail investors all seek exposure.

The WGC said central banks in China, Poland, Brazil and Turkey are among the major buyers pushing prices higher. Retail investors in exchange-traded funds have also raced to buy units in the investment schemes that track the metal’s price and avoid the need for physical ownership.

“Gold has undoubtedly benefited both during the short-lived spikes [in geopolitical risks] and from the climate of elevated nervousness,” the WGC said. “There are few indications that the status quo will change in the foreseeable future.”

In macro-economic data this week, December quarter inflation is data due on Wednesday and a higher-than-expected number may force the RBA to lift interest rates 25 basis points when it meets on February 3.

Market consensus forecasts currently call for Australia’s core inflation - stripping out volatile inputs - to rise to 3.3 per cent over the final quarter of 2025. That outcome would leave the interest rate policy decision a coin toss, as traders and economists remain divided on what the central bank will decide next.