Silver retreats after its best jump, delivering its best 12-month performance since 2008, with a rally of more than 200%. Despite the strong performance of silver, the global silver exchange-traded funds experienced an outflow of more than 3 million ounces since the start of 2026, while the gold ETFs witnessed a relatively steadier inflow. Thus, it reflects investors’ preference for more defensive exposure. The rising momentum of gold, surging to a record high of above $5,000 on Monday, initiated the retreat. This scenario marked a historic rally in investors’ interest in the safe-haven asset amid the rising geopolitical uncertainties.
An Exponential Growth of Gold
The gold price rose by 2.2% at $5,089.78 per ounce after reaching an all-time high of $5,110.50. The rise typically signals economic uncertainty or safe investments; notably, metals soared 64% last year after 1979. The factors that contributed to this rise were the safe-haven demand, US monetary policy easing, robust central bank purchases, including China’s fourteenth straight month of buying, and record inflows into exchange-traded funds. The prices have set consecutive record peaks over the past week, already rising to 18% this year. Kyle Rodda, the senior market analyst at Capital.com, reported that the latest catalyst, “is effectively this crisis of confidence in the US administration and US assets, that was set off by some of the erratic decision-making from the Trump administration last week.”
Reasons that Triggered the Price Hike
The value of gold soared as a result of the heightened tension between the US and NATO over Greenland and US President Donald Trump’s trade policies. Last week, Trump withdrew from imposing a tax on countries linked to Greenland, while on Saturday, he threatened to impose a 100% tariff on Canada if the Prime Minister, Mark Carney, struck a deal with China. Trump also tried to pressure French President Emmanuel Macron into joining his Board of Peace (BoP) initiative by threatening to hit French wines and champagnes with 200% tariffs. Some analysts opined that the board could undermine the United Nations’ role as the major platform for conflict resolution, though Trump said it would sideline and work with the UN.
The rising demand for yen has dragged the dollar broadly lower on Monday. A weak dollar makes gold more affordable for holders of other currencies. Additionally, the US Federal Reserve is also expecting to cut the interest rate again this year. Wars in Ukraine and Gaza, along with Washington’s seizure of Venezuelan President Nicolas Maduro, have aided in fuelling the price of precious metals. Other reasons for the surge in demand also include a range of factors, like inflation higher than usual and buying by central banks around the world. Furthermore, according to the Council Trade Association, there are only around 216,265 tonnes of metal that have been mined. This relative scarcity of gold can also aid in raising the price. Analysts, on behalf of the mounting global tensions, strong central-bank and retail demand expect gold rates to climb higher again, possibly marching towards $6,000 this year.
