Gold surges past $5,500 as safe-haven assets rally on geopolitics
Record gold prices and oil near $70 signal defensive investor positioning amid Iran tensions and economic uncertainty
Gold prices surged past $5,500 per ounce on Thursday, extending their record-breaking rally as investors fled to traditional safe havens amid escalating geopolitical tensions and growing economic uncertainty. The precious metal's ascent coincided with a resurgence in oil prices, with Brent crude climbing back toward $70 a barrel, painting a picture of broad-based risk aversion across financial markets.
Spot gold hit an intraday peak of $5,591.61 on January 29 before settling around $5,511.33, marking the first time the metal has ever traded above $5,000 per troy ounce. The surge represents a roughly 99% increase compared with January 2025, according to trading data , underscoring the intensity of the flight-to-quality movement that has dominated early 2026 trading.
The rally has been fueled by a powerful convergence of factors, with escalating geopolitical tensions taking center stage. The United States has intensified its rhetoric toward Iran, with reports of potential military actions fueling market anxiety. Tehran has threatened to target US military bases in response, raising the specter of a broader conflict in the Middle East. These tensions compound ongoing conflicts in Ukraine and Gaza, creating what the World Economic Forum's Global Risks Report 2026 identified as the year's top risks: geoeconomic confrontation and state-based armed conflict.
Behind the scenes, central banks have provided structural support for gold prices through unprecedented buying. Global gold demand reached an all-time high of 5,002 tonnes in 2025 , driving market value to a record $555 billion. Central banks added 863 tonnes to official reserves last year, with projections indicating continued purchases of approximately 800 tonnes in 2026. This sustained institutional accumulation has elevated gold's role in reserve portfolios, with the precious metal now comprising more than 20% of central bank reserves for many institutions.
"Gold's bull market is set to continue into 2026," analysts at Union Bancaire Privée noted in their latest investment outlook, citing persistent geopolitical risks and monetary policy uncertainty as key drivers. The Federal Reserve's decision to maintain interest rates has also supported non-yielding assets like gold, with expectations of future rate cuts and a weaker US dollar further bolstering demand.
Oil prices have mirrored gold's defensive surge, with Brent crude rising to $69.42 per barrel on January 29. The rebound followed earlier weakness in the month, when prices fluctuated between $64 and $66 per barrel, according to the International Energy Agency's Oil Market Report . US actions against Venezuelan oil tankers earlier in January amplified geopolitical concerns, contributing to crude's resurgence.
The simultaneous rally in both gold and oil presents challenges for policymakers and investors alike. While gold's surge signals mounting anxiety about economic and geopolitical stability, rising oil prices threaten to complicate inflation dynamics just as central banks navigate the delicate balance between supporting growth and containing price pressures. The IMF has warned that tariffs and geopolitical tensions threaten to undermine global growth, creating a precarious environment for risk assets.
Looking ahead, market participants are closely watching for any escalation in US-Iran tensions, as well as developments in Ukraine and the Middle East. The trajectory of US monetary policy and the dollar's strength will remain key factors for gold prices, while any disruption to oil supply chains could push crude prices higher. With the World Economic Forum highlighting the elevated risk landscape for 2026, the preference for defensive positioning appears likely to persist in the near term.