Editor’s Note
Gold has surged to a historic high above $5,090, driven by a combination of market factors. This article explores the reasons behind the rally and examines whether the next key resistance level of $5,400 is within reach.
Gold has reached a level that seemed impossible just a few years ago. Recently, XAU/USD broke through the $5,090 level and set a new record high near $5,090.81.
At the time of writing, spot gold (XAU/USD) was around $5,080, up about 1.87% for the session, with an intraday range of approximately $4,982.91 to $5,090.81.
Therefore, traders are now asking two simple questions:
- Why has the price of gold surged so rapidly?
- Is the next major milestone $5,400, a level indicated by Goldman Sachs in its updated year-end 2026 forecast?
Gold rose above $5,090 as investors flocked to safe-haven assets amid a weakening US dollar, while central bank buying and new private sector demand kept the market stable.
The main reasons behind this move are:
- Increased demand for safe-haven assets alongside rising geopolitical and policy risks.
- The US dollar weakened, which often pushes gold prices higher as gold is priced in dollars.
- Central banks have been significant buyers of gold for several years, and this sustained demand has established a new support level.
- A strong technical breakout provided momentum, and current indicators suggest that, although gold is somewhat overbought, it remains in an uptrend.
1) Safe-Haven Demand is Rising Again
When it becomes difficult for investors to assess risk, the value of gold typically increases. For example, rising geopolitical tensions and tariff-related uncertainties in 2026 have drawn investors towards traditional safe-haven assets.
This is significant because gold has evolved beyond just an “inflation story.” It is also a story of confidence, especially when investors are concerned about stability in currencies, trade rules, and global alliances.
2) The Dollar’s Value Fell, and Gold Seized the Opportunity.
Gold is priced in US dollars, which causes the dollar to act like a gravitational force on gold prices.
When the dollar weakens, gold prices often rise, even if nothing else changes, because global buyers can pay fewer euros, yen, or pounds for the same ounce of metal.
Last week, the dollar fell about 1.9% against a basket of major currencies, and such fluctuations can rapidly impact gold prices.
Today’s market analysis also noted a decline in the dollar index, signaling a favorable environment for bullion.
3) Central Bank Buying is No Longer a Secondary Event.
The pace at which central banks are buying gold seems excessive compared to previous economic cycles. World Gold Council 2024 data shows net gold purchases totaling 1,045 tonnes, with purchases exceeding 1,000 tonnes for three consecutive years.
That steady demand can limit supply in the market and mitigate the effects of short-term profit-taking.
The World Gold Council also highlighted that many reserve managers expect the share of US dollars in reserves to gradually decrease over time. In its survey, 73% of respondents predicted the dollar’s share would be lower in five years.
Gold often benefits when reserve diversification becomes a strategic theme.
4) Private Investors Also Participated, and Supply Saw Little Change.
Goldman Sachs has raised its year-end forecast for gold to $5,400 per ounce, citing private buyers competing with central banks for gold.
