How gold and geopolitics collided to drive a market surge

Over the past month, gold has been front‑page news after one of its sharpest moves in decades. Prices climbed more than 13%, the biggest monthly rise since 1999, before quickly reversing. It’s no surprise that many investors found the whole episode unsettling. Movements of this size normally play out over a year, not in a matter of hours. So, what’s behind it, and what should investors learn from it?

What drove gold higher?

A series of powerful forces aligned to push gold to an intraday high of USD 5,595 per ounce on 29 January.

1. Geopolitical uncertainty rose sharply

Gold often shines when the world feels uncertain, and January was no exception. President Trump’s attempt to acquire Greenland didn’t spark immediate action, but it did reawaken concerns about geopolitical unpredictability. These moments remind markets just how quickly global tensions can flare, prompting investors to reach for assets that feel steadier, with gold traditionally top of that list.

2. Questions emerged around US policy and Federal Reserve independence

At the same time, developments inside the US created fresh nerves. A criminal investigation involving the Federal Reserve raised uncomfortable questions about central‑bank independence, something financial markets hold dear. Add in worries about ‘fiscal dominance’, the idea that political pressures could steer monetary policy, and investors understandably became more cautious.

3. A sharp fall in the US dollar amplified the move

Gold is priced in US dollars, so a weaker dollar typically lifts the metal. January saw the dollar’s steepest four‑day drop since last spring, making gold cheaper for buyers using stronger currencies and pulling additional demand into the market.

For global investors, these currency swings matter beyond just gold: a falling dollar can boost the value of other currencies and shift the translated returns of overseas assets. It was a reminder of how closely currency trends and portfolio outcomes are linked.

Why did gold fall just as quickly?

After touching new highs, gold reversed dramatically, dropping below USD 5,200 later that same day and briefly under USD 5,000 on 30 January. Moves of that scale usually unfold slowly, not in a 24‑hour period.

What caused the pullback?

• Concerns around political interference in the Federal Reserve began to calm
• The US dollar stabilised
• Some investors chose to lock in profits after the rapid rally
• Geopolitical headlines cooled, easing the fear‑driven rush into gold

In short, gold surged on uncertainty and eased when that uncertainty retreated.

What does this mean for investors?

Episodes like this are a good reminder that even traditionally defensive assets can move sharply when markets are driven by headlines rather than fundamentals. Gold plays a role as a diversifier, but it’s only one part of a much broader toolkit.

For multi‑manager portfolios like ours, diversification is the anchor. We build resilience by combining building blocks that are driven by different forces. That includes regional equity positions in Europe, Japan and select frontier markets, where valuations remain appealing and fundamentals continue to improve. We balance that with income‑orientated exposure such as emerging‑market debt, which offers attractive real yields, and short‑duration high‑yield bonds that are less sensitive to shifts in rate expectations. We also hold selective infrastructure positions for their steady income and low correlation to mainstream markets. Gold sits within this mix as a diversifier, not a dominant driver.

Taken together, these positions aim to add meaningful value over time and help keep portfolios steadier when volatility spikes.

The aim isn’t to chase every market move, but to build portfolios that can adapt and hold steady across a wide range of environments.

Looking ahead

Gold will continue to respond to shifts in geopolitics, central‑bank policy and currency trends. Short‑term swings are likely to remain part of the landscape. But for long‑term investors, the most important thing is not the daily noise, it’s sticking to a clear, well‑diversified strategy.

Ultimately, these episodes highlight the strength of a disciplined, long‑term approach. Diversification and patience remain the most effective ways to navigate uncertain markets.

If you’d like to talk through how these movements affect your portfolio, or how we position for long‑term resilience, please get in touch with your private banker.