FINANCE

Gold’s Dazzling Run Tests Limits of Bullish Sentiment

Published: Jan. 27, 2026 12:54 a.m. GMT+8

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Spot gold prices broke through two key levels on Jan. 26, surpassing the $5,000 per ounce mark on Monday morning before hitting a historic high of $5,111.17 per ounce. Photo: VCG

Gold surged to a record above $5,100 an ounce Monday, capping a six-day rally fueled by mounting geopolitical tensions and bets that the U.S. Federal Reserve will maintain a dovish stance.

Spot gold in London pierced the $5,000 threshold early in Asian trading, then climbed to an intraday high of $5,111.17 by afternoon.

The rally has gathered steam amid renewed investor enthusiasm for gold as a hedge against inflation, dollar weakness and ballooning U.S. fiscal risks under the current administration. But analysts are voicing growing concerns that the rally may be overheating.

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Explore the story in 30 seconds

Gold hit a record above $5,100/oz after a six-day rally driven by geopolitical tensions and expectations of a dovish Fed.
Analysts warn the surge may be unsustainable, citing overvaluation and risks of a sharp correction if tensions ease or Fed shifts.
Gold prices rose nearly 40% in China; banks are tightening investment controls amid signs of a bubble and rising consumer costs.

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Who’s Who

UBS: UBS had projected that gold prices would reach a certain level by mid-2026, but the current surge in gold prices has already surpassed these projections. This indicates that the market's bullish run has exceeded at least some institutional forecasts.

Bank of America: Bank of America (BOA) is noted for its particularly bullish outlook on gold. The bank predicts that gold could reach $6,000 an ounce, making it among the most optimistic institutions regarding gold's future price.

China International Capital Corp.: On January 20, China International Capital Corp.'s multi-asset team acknowledged the bullish outlook for declining U.S. dollar credit quality but cautioned that gold valuations were reaching their upper limits. They stated that being bullish doesn't necessitate blind faith, implying a potential for short-term volatility.

Citic Futures Co. Ltd.: Zhu Shanying, an analyst at Citic Futures Co. Ltd., expressed caution regarding the speed of the gold rally. She highlighted that short-term drivers, like delayed Fed rate cuts or trade issue resolutions, are fragile. Zhu warned that easing geopolitical tensions or hawkish Fed signals could lead to a sharp correction in gold prices.

Goldman Sachs: Former Goldman Sachs strategist Robin Brooks is mentioned in the article regarding the recent surge in gold prices. Brooks believes the fundamentals do not justify this surge, suggesting it is driven by retail investors concerned about rising sovereign debt. He notes that emerging-market central bank gold buying remains steady.

Agricultural Bank of China: Agricultural Bank of China, one of China's "Big Four" banks, implemented new risk assessment requirements for its gold accumulation products on January 26. Effective January 30, only investors with a "cautious" or higher risk rating are permitted to initiate or maintain positions in these products.

Zijin Mining Investment (Shanghai) Co. Ltd.: **Zijin Mining Investment (Shanghai) Co. Ltd.** is a financial institution whose executive, Chen Dapeng, views the gold rally as a capital reallocation away from the dollar. He noted that domestic Chinese funds are moving into gold due to concerns about the real estate sector and the advancing internationalization of the yuan.

Bridgewater Associates: Ray Dalio, the founder of Bridgewater Associates, stated at the World Economic Forum that gold serves as a vital hedge. He cautioned that policies under the Trump administration might lead foreign governments to reduce their holdings of U.S. assets, potentially sparking a "capital war." Dalio suggested allocating 5% to 15% of investment portfolios to gold.

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What Happened When

Monday：: Gold surged to a record above $5,100 an ounce, capping a six-day rally and spot gold in London pierced the $5,000 threshold, climbing to an intraday high of $5,111.17.

Jan. 20, 2026：: At the World Economic Forum in Davos, Ray Dalio called gold a crucial hedge and warned that Trump’s policies may prompt foreign governments to reduce exposure to U.S. assets, possibly igniting a 'capital war.' Dalio advised investors to allocate 5% to 15% of portfolios to gold.

Jan. 20, 2026：: China International Capital Corp.’s multi-asset team stated the bullish thesis on declining U.S. dollar credit quality remains intact but warned valuations are testing the upper bounds of their range.