A Look Back to What Took Gold to $5,000

With very little emerging news today affecting the gold markets let us take a look back at the major drivers that brought gold to the precipice of $5,000 per ounce this year and last.

Geopolitical Uncertainty

Geopolitical instability served as one of the most powerful catalysts driving gold's advance. Escalating tensions in the Middle East — culminating in a direct naval confrontation between U.S. and Iranian forces near the Strait of Hormuz — triggered sharp price spikes as investors sought refuge in hard assets. Simultaneously, the collapse of Ukraine-Russia peace negotiations and the highly controversial U.S. capture of Venezuelan President Nicolás Maduro fueled a broad flight to safety, accelerating capital flows into precious metals.

Trade policy uncertainty added further pressure. President Trump's "America First" agenda, which included a 100% tariff threat against Canada and a renewed push to acquire Greenland, injected significant turbulence into global economic relationships and undermined confidence in traditional financial assets.

Monetary Policy and Domestic Uncertainty

On the domestic policy front, a criminal investigation into Federal Reserve Chair Jerome Powell raised serious questions about the central bank's independence — a development that rattled institutional confidence and added a layer of uncertainty to the monetary policy outlook.

Weaker-than-expected employment data reinforced expectations for near-term interest rate cuts, lowering the opportunity cost of holding non-yielding assets such as gold and lending further upside momentum to prices. However, the nomination of Kevin Warsh to succeed Powell briefly disrupted the rally in late January. Perceived as a more hawkish policymaker, Warsh's selection prompted investors to reprice rate expectations, triggering a wave of profit-taking that produced a sharp, if temporary, pullback.

Structural and Institutional Demand

Perhaps the most consequential long-term driver has been the accelerating pace of institutional accumulation. Central banks — led by the People's Bank of China and the Reserve Bank of India — continued their aggressive de-dollarization strategies, purchasing in excess of 1,200 tonnes of gold annually as they diversified reserves away from U.S. Treasury holdings. This sustained sovereign demand has established a powerful structural floor beneath the market.

Complementing central bank activity, gold-backed Exchange-Traded Funds recorded historic inflows, particularly across Indian and North American markets, providing consistent and broad-based support. A notable new dynamic also emerged as large cryptocurrency firms — most prominently Tether — established themselves as significant bullion holders, acquiring physical gold to underpin their digital token reserves.

Market Dynamics and Volatility

Despite the extraordinary rally, the market was not without turbulence. February 2026 saw meaningful pullbacks as the geopolitical risk premium eased modestly and technical rebalancing — including the widely followed Bloomberg Commodity Index realignment — prompted near-term selling pressure. These corrections, however, appear to have been orderly and relatively contained.

The broader outlook among institutional analysts remains constructively bullish. Should persistent fiscal imbalances, structural debt concerns, and geopolitical fragmentation continue to define the macro landscape, many forecasters project gold could advance toward the $6,000 to $7,000 range by late 2026 — a target that, while ambitious, reflects the magnitude of the forces currently reshaping global capital allocation.

Wishing you as always good trading,