NEW YORK, Jan 26: Gold prices surged above $5,000 an ounce for the first time on Sunday, reaching the milestone earlier than Wall Street expected and intensifying debate over the speed and sustainability of the precious metals rally.

The advance in gold has become a defining feature of the so-called “debasement trade,” as investors seek protection against the erosion of purchasing power amid rapidly rising government debt worldwide.

“The rise in precious metals prices is breathtaking and profoundly scary,” wrote Robin Brooks, senior fellow at the Brookings Institution, on Sunday, calling the move in gold “part of something much bigger,” Brooks warned markets may be entering the early stages of a global debt crisis, as investors increasingly fear governments will attempt to inflate away unsustainable debt levels.

Brooks noted that while the U.S. dollar remained relatively stable in the second half of last year, it has begun 2026 on a downward path. A weaker dollar, he said, could further accelerate the gold rally by increasing the purchasing power of non-dollar buyers.

Reflecting the momentum, Goldman Sachs recently raised its year-end gold price target to $5,400 from $4,900, citing stronger participation from private investors diversifying portfolios and seeking to protect wealth. The bank said risks to its upgraded forecast remain two-sided but are still skewed to the upside amid lingering global policy uncertainty.

Bullion has moved higher after every major geopolitical development this year, including the U.S. capture of Venezuelan leader Nicolás Maduro and President Donald Trump’s tariff threats linked to Greenland. Gold is up about 15% so far this year, following a 65% surge in 2025.

While demand from foreign central banks has remained strong as they reduce exposure to U.S. Treasurys, Brooks said that alone does not explain the magnitude of the recent rally. He argued that broad gains across precious metals suggest central banks are not the primary driver.

Elsewhere in the metals market, silver topped $100 an ounce for the first time on Friday and continued climbing to hover above $107. Platinum reached new highs, gaining more than 40% this year, while copper surged to a record above $13,000 per ton in London.

Gold extended gains in early Asian trading on Monday, rising to around $5,045 an ounce, supported by geopolitical risks and uncertainty surrounding U.S. monetary policy. Three-way peace talks involving Russia, Ukraine, and the United States ended in Abu Dhabi without a breakthrough, according to the BBC, though Ukrainian President Volodymyr Zelensky proposed a follow-up meeting as early as next week. A U.S. official said another round of talks is set to begin on February 1.

Ongoing conflict in Ukraine, military intervention in Venezuela, and renewed threats to annex Greenland have reinforced demand for traditional safe-haven assets such as gold. Investors are also awaiting President Trump’s pick for the next Federal Reserve chair, after he said interviews with candidates have concluded. A more dovish appointment could boost expectations for further interest-rate cuts, reducing the opportunity cost of holding non-yielding assets like gold and lending additional support to prices.