On a weekly closing basis, gold’s continuous futures contract set another record last week. It reached an intraday high of $4,991.40 an ounce on Friday, Jan. 23, and closed at $4,979.70. In Monday morning trading on Jan. 26, the futures contract was up over 2%, taking gold’s price above $5,000 an ounce.
FIGURE 1: GOLD CONTINUOUS CONTRACT—PAST SIX MONTHS
Source: MarketWatch
What is driving gold’s rally?
Gold’s rally to fresh record highs in early 2026 has been driven by a mix of classic “store-of-value” tailwinds and several very 2026-specific catalysts. Reuters cites several reasons for the ongoing strength: geopolitical tensions, a softer U.S. dollar, and expectations of further Federal Reserve interest-rate cuts.
Major banks have responded by lifting targets rather than fading the move. For example, Business Insider reports that Goldman Sachs raised its end-2026 forecast to $5,400 an ounce, arguing that incremental private-sector diversification is now stacking on top of already strong demand from central banks around the globe. For financial advisors, the takeaway is less about wondering why gold continues to rise and more about what the market is signaling: a longer-lived regime in which private investors and institutions are willing to pay more for hedges against policy and macro uncertainty.
Barron’s provided this perspective on gold following a dramatic geopolitical week centered on the Davos conference:
“Gold is hovering around the $5,000-an-ounce mark, just months after topping the $4,000 threshold for the first time. The price pulled back slightly after tensions between the U.S. and Europe eased following President Donald Trump’s backtrack on Greenland—but that didn’t last long. The metal resumed its rally as the message from the World Economic Forum in Davos became: brace for a less stable world order.
“But it’s not just the future of an Arctic island that has made gold more attractive. Somewhat lost in the noise over Greenland were messages that a new Fed chair announcement could come as soon as next week, and that the White House projects the U.S. economy will grow between 4% and 5% in inflation-adjusted terms, twice as fast as consensus forecasts. That suggests there will be political pressure on the new central bank leader to let the economy run hot by lowering interest rates.
“Gold benefits from lower rates, as its lack of a yield is less of a disadvantage. It also acts as a hedge against the possibility of a spike in inflation. While the Fed is expected to hold rates steady next week, that will likely be overshadowed by expectations of more cuts under the leadership of a new chair.
“If the Fed’s policy direction is in question, there is little doubt what other countries’ central banks are doing—buying up gold as fast as they can. The National Bank of Poland this month approved a plan to add another 150 metric tons to its gold holdings. Gold recently surpassed Treasuries as a share of global reserves, making it the second‑largest holding behind the dollar, according to analysts at LPL Financial.”
Bespoke Investment Group puts gold’s rally into historical perspective:
“Precious metals prices continue to explode higher. Gold was up 8% this week and is now +15% on the year in spot trading. Price action has been accelerating, too. In 2023, gold rose 13%, followed by a 27% gain in 2024 and a 65% advance last year. At the year-to-date pace, it’s on track for a 792% gain in 2026, which would leave it around $38,500/oz by year end. Obviously, that won’t happen, but we use that extrapolation to illustrate just how unsustainable this price action is.
“Over the long-term, this is easily the highest-ever gold price when adjusting for inflation. The current spot price near $5000/oz. is 28% higher than the peak real gold price from the start of 1980.”
FIGURE 2: HISTORIC SURGE IN GOLD PRICES—COMPARISON ON INFLATION-ADJUSTED BASIS
Source: Bespoke Investment Group
Related Article: Gold’s stair-step pattern
How does gold’s performance compare to other ‘safe haven’ assets?
Mark Hulbert at MarketWatch says gold has been “the only go-to safe haven from global turmoil—not bitcoin or bonds.”
Hulbert added,
“Among the assets typically considered safe havens, gold is the only one that rose in the wake of President Donald Trump’s saber-rattling about Greenland. On Jan. 20, when the S&P 500 fell 2.1%, long-term U.S. Treasurys—the traditional safe haven during times of geopolitical crisis—fell by more than they have in any other trading session since last July.
“Bitcoin performed even worse on Jan. 20, losing 3.8%. Losing this much on a day when gold rose 3.7% is just the opposite of what many of bitcoin’s true believers would have predicted. For several years, they have referred to bitcoin as ‘gold 2.0.’”
FIGURE 3: WHAT PERFORMED BETTER AS A SAFE HAVEN?
Source: MarketWatch, Hulbert Ratings
“Also revealing are gold and bitcoin’s divergent reactions to geopolitical risk. Consider their correlations with the Economic Policy Uncertainty Index (EPU) and the Geopolitical Risk Index (GPR), which measure different dimensions of geopolitical risk. …
“The correlation coefficients of gold to the EPU and the GPR are positive, while bitcoin’s correlations to these two risk indexes are both inverse. …
“The bottom line? As U.S. Treasurys lose their status as the go-to asset in times of geopolitical turmoil, gold rather than bitcoin appears to be the major beneficiary.”
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