By Mike Dolan
Jan 26 –
What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Gold seemed unstoppable on Monday as it topped $5,000 per ounce for the first time ever, vaulting more than 80% over the past 12 months.
What’s the trigger for the latest surge? Take your pick from the potential drivers: a falling dollar, a fracturing world order, renewed trade tensions, worries about Fed independence, and a higher inflation horizon.
Central bank buying and retail speculation also continue to boom. So, looking forward, gold and precious metals – with silver at new records too – appear likely to remain the haven and hedge of choice.
I’ll get into all that and more below.
But first, check out my latest column on why this week’s Fed policy meeting could mark a key flashpoint in the escalating battle for central bank independence.
And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
GOLD-PLATED FEAR
The latest spike in the gold price comes after a torrid week of geopolitics surrounding Greenland, capped by President Trump’s abrupt U-turn on military and trade threats against the Arctic island and its European backers, respectively.
While the about-face has lowered tensions, it was a hollow victory for Trump’s NATO allies, some of whom fear lasting damage to the alliance in light of the president’s erratic, centralized foreign policy decision-making.
And the spectre of trade tensions still looms large as tariff threats against other allies remain live. Trump lashed out at Canada again on Saturday, threatening 100% tariffs over Prime Minister Mark Carney’s pending trade agreement with China.
Meantime, the dollar plunged to two-month lows against the yen amid speculation about joint U.S.-Japan action to prop up Japan’s currency. This followed reports on Friday that the New York Fed had checked dollar/yen rates with dealers – considered a precursor to intervention. Any U.S. involvement would reinforce the belief that Washington wants a weaker dollar generally.
At home, the fatal shooting of another anti-ICE protester in Minneapolis has further raised U.S. political tensions in what is a crucial election year for the Trump administration. What’s more, the furore could risk a partial government shutdown later this week. Chuck Schumer, the Senate’s top Democrat, said on Saturday night his party would vote against funding legislation that includes money for the Department of Homeland Security.
