Gold prices (GC=F) rose above $5,000 an ounce on Sunday, hitting a major milestone earlier than Wall Street expected and raising questions about the precious metal’s astonishing pace of gains.
Gold’s surge has become a symbol of the so-called “devaluation trade,” in which investors buy assets to prevent a surge in global government debt that reduces purchasing power.
“The rise in precious metals prices is alarming and extremely scary,” Brookings Institution senior fellow Robin Brooks wrote on Sunday, noting that the rise in gold prices is “part of something bigger.”
“We are at the beginning of a global debt crisis, and markets are increasingly worried that governments will try to inflate their way out of runaway debt,” Brooks wrote.
Brooks noted that while the U.S. dollar (DXY.NY-B) remained relatively stable in the second half of last year, it has started this year on a downward trajectory.
“A weaker dollar will accelerate gold price gains and depreciation trades as it increases the purchasing power of non-dollar buyers,” Brooks wrote.
Goldman Sachs recently raised its year-end price target to $5,400 from $4,900, citing increased participation from private investors seeking to diversify their portfolios and protect their wealth.
“We see risks to upward revisions to gold price forecasts as bidirectional but still significantly tilted to the upside as private sector investors are likely to diversify further amid lingering global policy uncertainty,” analysts said.
Gold prices have rallied this year amid every major geopolitical event, including the U.S. capture of Venezuelan leader Nicolás Maduro and President Trump’s tariff threats over Greenland.
The precious metal is up 15% so far this year, following a 65% surge in 2025.
While demand for gold from foreign central banks has been strong amid reduced exposure to U.S. Treasuries, Brookings’ Brooks doesn’t think that explains the sharp rise in gold prices so far this year.
“The fact that there are widespread bubbles across all precious metals suggests that central banks should not be the key driver,” Brooks wrote.
Elsewhere, the precious metal (SI=F) broke above $100 for the first time on Friday and continued its gains late Sunday, hovering above $107. Platinum (PL=F) also hit new highs, up more than 40% year to date.
London copper prices (HC=F) rose above $13,000 a ton on Friday, hitting a record high.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X: @ines_ferre.
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