Gold hits record $5,000 US an ounce as months-long rally continues amid

Gold charged past $5,000 US an ounce for the first time on Monday — while silver jumped to $110 an ounce — as an array of geopolitical tensions pounded the U.S. dollar.

The value of precious metals has surged in recent months as investors seek relatively safe places to invest.

“As ​long as fiscal dominance, geopolitical fragmentation and central bank credibility remain in question, precious metals are likely to stay at the center of this perfect storm, not just as hedges, but as alternatives,” said Daniela Hathorn, ⁠senior market analyst at Capital.com.

The U.S. dollar fell to its lowest since mid-November after Japan’s yen rose as much as 1.5 per cent in Europe. While the dollar had gained against the yen in recent months, it fell sharply in the past few days after officials in both Japan and the U.S. indicated they were prepared to intervene to strengthen the yen.

The dollar slipped to 153.88 Japanese yen from 155.01 yen; it had been trading at around 158 yen last week. However, a weak yen is generally favourable for Japanese exporters, because it helps elevate the value of their overseas earnings.

Although Japanese finance officials did not directly confirm such intervention was in the works, they confirmed they were in close co-ordination with the U.S. on currency fluctuations.

“Intervention chatter did the trick. Since Friday, the yen has staged a sharp rebound on expectations that Japanese authorities — possibly with U.S. co-ordination — would step in,” said Ipek Ozkardeskaya, a senior analyst at Swissquote.

The yen has been under relentless pressure since Sanae Takaichi took over as Japan’s prime minister in October.

Takaichi has made campaign promises to ramp up spending and cut taxes ahead of a snap election on Feb. 8, adding to concerns that Japan’s already stretched finances could become even less manageable.

That has pushed government bond yields to record highs, just as the ‍Bank of Japan is slowly raising ⁠interest rates to tackle inflation. As the yen strengthened, Japan’s Nikkei dropped 1.75 per cent.

As U.S. dollar sinks, gold hits record

With the dollar plumbing its lowest levels against a basket of major currencies in four months and volatility picking up, gold drew in a fresh wave of capital, hitting yet another record high in what has been a blistering rally over the last six ‍months.

Gold was last up 2.1 per cent at $5,089 US an ounce, taking its gains in January to more than 17 per cent, while silver rose almost seven per cent to $110 an ounce, up ​over 50 per cent this month.

“Gold clearly has a quite compelling story, in terms of central bank reserve diversification, which you would have thought gets reinforced by all of this intervention talk and events in the U.S. more generally,” Daiwa Capital Markets economist Chris Scicluna said.

Possible U.S. involvement in the Japanese currency market is “very significant,” added Scicluna.

“If the U.S. authorities really are keen to weaken their currency, then that’s…