Gold posts best month since 1999, soaring 13.2% in January on geopolitical risks and dollar weakness

Gold recorded its best monthly performance in more than two decades in January, climbing 13.2% as investors sought refuge amid rising geopolitical uncertainty and a softening US dollar. The precious metal began the year at $4,313 per ounce and reached an all-time intraday high of $5,598, extending a record-breaking rally that began in 2025.

Key Drivers of the Rally

Analysts pointed to multiple factors fueling the surge, including US pressure over Greenland, threats of military action against Iran, fears of a partial US government shutdown, and market doubts over Federal Reserve policy independence. A broad investor shift away from government bonds and fiat currencies—driven by concerns over fiscal sustainability and currency depreciation—also bolstered demand for tangible safe-haven assets. The US dollar index fell to a four-year low, making gold cheaper for international buyers.

Market Outlook and Analyst Views

Ole Hansen, head of commodity strategy at Saxo Capital, noted that “uncontrolled fiscal debt continues to weaken confidence in fiat currencies,” prompting capital to move away from US assets. Hamad Hussain, climate and commodities economist at Capital Economics, added that geopolitical risks linked to US threats against Greenland and Iran significantly increased safe-haven demand. While gold is technically overbought and could face a correction, strong dip-buying interest suggests the upward trend remains supported.

Background

Gold’s record run last year was fueled by similar dynamics—geopolitical tensions, concerns over Fed independence, and a weakening dollar. In January, the Fed held rates steady at 3.5–3.75%, while Chair Jerome Powell’s cautious remarks on US debt further weighed on dollar sentiment.