Gold (GC=F) continued its gains on Monday, surpassing $5,000 an ounce ahead of Wall Street expectations. Futures hit a major milestone on Sunday, while silver (SI=F) surged above $115 at one point, raising questions about the precious metal’s astonishing pace of gains.
Gold’s surge has become a sign of the “devaluation trade,” in which investors buy assets to prevent a surge in global government debt that reduces purchasing power.
Silver has been more aggressive, posting a near-parabolic surge that is up 50% year to date.
“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.
Read more: How to Invest in Gold in 4 Steps
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. The dollar weakened against major currencies on Monday, hitting a four-month low on speculation that the United States may coordinate with Japan to support the yen.
“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 on every major geopolitical event this year, including the U.S. capture of Venezuelan leader Nicolás Maduro and President Trump’s tariff threats over Greenland.
The precious metal is up more than 16% 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, Brooks believes this does not explain 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 in the metals complex, platinum (PL=F) also hit new highs, up more than 40% year to date.
