Gold futures reclaim $5,000 mark, buoyed by 'gradual erosion of confidence' in the U.S. dollar

By Myra P. Saefong and Steve Goldstein

Trust has become a 'scarce commodity' and investors are 'redefining the concept of financial security,' says analyst

Gold is trading above $5,000 again.

Gold futures rose on Monday, buoyed in part by a fall in the U.S. dollar toward a four-year low - with prices for the yellow metal scoring their first settlement above $5,000 an ounce in more than a week.

Growing uncertainty surrounding the independence of the U.S. Federal Reserve, ongoing purchases of gold by global central banks and uncertainty overseas have also contributed to the metal's strength.

Gold's rise back above the key $5,000 level is "not merely an exceptional price fluctuation, but rather a direct reflection of deeper shifts in the structure of the global monetary system and in the balance of confidence between currencies and assets," said Rania Gule, senior market analyst at XS.com.

On Comex, gold for April delivery (GCJ26) (GC00) rose 2% to settle at $5,079.40 an ounce. Prices based on the most active contract had ended last week with a gain of nearly 5%, but that's after losing roughly that same amount the week before, FactSet data show. Gold has pulled back since touching a record intraday high of $5,626.80 on Jan. 29.

Sister metal silver has also experienced volatile trading, with recent losses pulling it into a bear market on Jan. 30. On Monday, March silver (SIH26) (SI00) climbed 6.9% to settle at $82.23 an ounce.

Gains in prices of the precious metals came as the ICE U.S. Dollar Index DXY, which often move in the opposite direction of dollar-denominated commodities, headed toward a four-year low, touching an intraday low of 96.837 and last trading down 0.8% at 96.874.

An election win for Japan's conservatives, who are pushing for more fiscal spending, and a Bloomberg report that China is urging local banks to scale back their holdings of U.S. government debt were both seen as helping lift demand for gold and contributing to weakness in the dollar.

Gold's historical rise sends a clear message from the markets that 'trust has become a scarce commodity, and investors - both individuals and central banks - are redefining the concept of financial security.'Rania Gule, XS.com

Overall, gold's historic rise sends a clear message from the markets that "trust has become a scarce commodity, and investors - both individuals and central banks - are redefining the concept of financial security," said Gule, in Monday commentary.

With China continuing to accumulate gold, growing doubts over the Fed's independence and escalating geopolitical risks, gold is "well positioned to remain at the forefront as one of the most important assets of the coming phase - not merely as a temporary safe haven, but as a core pillar in the rebalancing of the global financial system," Gule added.

-Myra P. Saefong -Steve Goldstein

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02-09-26 1421ET