Gold Soars Past $5,100 Amid New Trump Tariff Threats

Gold prices climbed on Tuesday, continuing a powerful rally driven by geopolitical uncertainty and renewed trade tensions. The precious metal is holding near record highs as investors seek safe-haven assets.

Spot gold rose 1.6% to $5,092.70 per ounce after hitting an all-time high of $5,110.50 on Monday. This marks the first time the metal has breached the significant $5,100 level. Meanwhile, U.S. gold futures for February delivery saw a modest increase of 0.1%, trading at $5,088.40 per ounce.

Figure 1: Gold prices (XAU/USD) chart from early 2025 to January 2026, showing a powerful uptrend that breached the $5,100 level.

Trade Tensions and Dollar Weakness Drive Demand

Analysts point to President Donald Trump's aggressive trade policy as a key catalyst for gold's recent performance. "Trump's disruptive policy approach this year is playing into the hands of precious metals as a defensive play," said Tim Waterer, chief market analyst at KCM Trade. "The threats of higher tariffs to Canada and South Korea are doing enough to keep gold a safe-haven choice."

On Monday, President Trump announced plans to raise tariffs to 25% on certain South Korean imports, including autos, lumber, and pharmaceuticals, citing Seoul's failure to implement a trade deal. This followed recent tariff threats against Canada, which emerged after Canadian Prime Minister Mark Carney's visit to China.

This policy unpredictability, coupled with the risk of a U.S. government shutdown, has pressured the U.S. dollar. A weaker greenback typically makes gold cheaper for buyers holding other currencies, further boosting its appeal.

Christopher Wong, a strategist at OCBC, noted that gold's rally reflects a "material geopolitical, or uncertainty premium" that is "driven less by cyclical factors and more by the persistent uncertainty around geopolitics, policy unpredictability and (loss of) confidence in the dollar."

Silver Surges, But Is It Overbought?

Silver has also experienced a dramatic surge, with spot prices jumping 6.1% to $110.19 an ounce. This follows a record high of $117.69 set on Monday. So far this year, silver is up more than 50%.

However, some analysts are sounding a note of caution. According to a note from BMI, a unit of Fitch Solutions, silver now appears expensive relative to gold. The gold-to-silver ratio has fallen to a 14-year low, suggesting a potential imbalance.

BMI attributed the latest rally to speculative buying and expects prices to ease in the coming months. The firm anticipates that easing supply tightness and peaking industrial demand, partly due to a slowing Chinese economy, could cool the market.

Figure 2: The annual percentage change in silver prices from 2000 to 2026, highlighting a massive projected gain in 2025 and a subsequent strong performance in 2026.

Other Metals and Fed Outlook

The rally has not extended to all precious metals. Spot platinum fell 2.2% to $2,697.45 per ounce after setting its own record of $2,918.80 in the previous session. In contrast, palladium added 1.1% to reach $2,004.37.

Market participants are also watching the U.S. Federal Reserve, which begins its policy meeting later today. The central bank is widely expected to hold interest rates steady, especially given the challenges posed by the Trump administration's policies to its independence.