Gold (GC=F) topped $5,000 an ounce faster than Wall Street expected and continued to rise on Monday. Futures reached a major milestone on Sunday, with silver (SI=F) soaring above $115 at one point, raising questions about the incredible speed of the precious metal’s rise.
The soaring price of gold has become a hallmark of ‘downgrade trades’, with investors buying up assets to protect against a decline in purchasing power amid soaring government debt around the world.
Silver has moved even more aggressively, posting a near-parabolic surge, up 50% since the beginning of the year.
“The rise in precious metals prices is breathtaking and quite frightening,” Robin Brooks, a senior fellow at the Brookings Institution, wrote on Sunday, noting that the rise in gold prices is “part of something much larger.”
“We are at the beginning of a global debt crisis, and markets are increasingly concerned that governments will seek to run up debt out of control,” Brooks wrote.
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Brooks noted that the US dollar (DXY.NY-B) was relatively stable in the second half of last year, but started this year on a downward trajectory. The dollar fell against major currencies on Monday, hitting a four-month low on speculation that the United States could join forces with Japan to support the yen.
“A weaker dollar will further accelerate gold price gains and trade declines as non-dollar buyers increase their purchasing power,” Brooks wrote.
Goldman Sachs recently raised its year-end price target from $4,900 to $5,400, noting increased participation from retail investors looking to diversify their portfolios and protect their assets.
“The risks to our higher gold price outlook are two-sided, but we still see it as heavily skewed to the upside, as private sector investors may diversify further amid lingering global policy uncertainty,” the analysts said.
Every major geopolitical event this year, including the U.S. detention of Venezuelan leader Nicolas Maduro and Trump’s threat to impose tariffs on Greenland, has boosted bullion prices.
The precious metal is up more than 16% year-to-date after surging 65% in 2025.
Brooks argued that foreign central banks’ strong demand for gold as they reduce their exposure to U.S. Treasuries does not explain the large rise in gold prices so far this year.
“The fact that this is a widespread bubble across all precious metals argues against central banks being the primary driving forces,” Brooks wrote.
Elsewhere in the metals complex, platinum (PL=F) also hit new highs, gaining more than 40% so far this year.