Record gold and silver prices highlight growing threat to US dollar dominance

The US dollar’s standing as the world’s primary safe-haven asset is increasingly being challenged, as global investors and central banks are rapidly pivoting towards gold and silver, amid rising geopolitical and economic uncertainty.

“Globally, there are two main safe-haven assets; one is the US dollar, and the other is gold,” Syed Osama Rizvi, Global Market and Product Strategist at Primary Vision, said while talking to Aaj News programme Dus with Imran Sultan on Sunday.

Explaining the ongoing rise in yellow metal, Rizvi explained that historically, whenever geopolitical tensions arose, the US was insulated and isolated from direct impact, playing the role of a stabiliser. As a result, the US dollar remained the top store of value.

“This time around, the US itself is at the centre of these geopolitical tensions. Without going into too much detail, US economic indicators have been fluctuating, and investor confidence in the US dollar has eroded somewhat.”

Osama shared that 10 years ago, around 66% of global central bank reserves were held in dollars.

“Today, that figure has fallen to 56% — a decline of 10%. As a result, people are moving away from the US dollar and turning to gold, using it as a hedge to protect themselves from uncertainty.”

Alongside gold, silver has also begun to attract safe-haven inflows, signalling a broader shift within precious metals.

“Silver has always existed as an asset, but it wasn’t as highly appreciated before because the US dollar remained central to global transactions. Now, we are seeing safe-haven investment flows into silver as well.

“Going forward, I believe this trend will continue,” said Osama.

Gold surged to a record high above $5,100 an ounce on Monday, extending a historic rally as investors piled into the safe-haven asset amid rising geopolitical uncertainties.

Spot gold was up 2.2% at $5,089.78 per ounce by 0656 GMT, after earlier touching an all-time high of $5,110.50. US gold futures for February delivery also gained the same amount to $5,086.30 per ounce.

Meanwhile, spot silver advanced 4.8% to $107.903, after hitting a record of $109.44.

Silver climbed above the $100 mark for the first time on Friday, building on its 147% rise last year as retail-investor flows and momentum-driven buying compounded a prolonged spell of tightness in physical markets for the metal.