Gold Prices Surge as Global Risks Dominate Davos Agenda

Gold is gaining significant traction as investors scramble for a hedge against rising geopolitical turmoil. With global economic leaders identifying "geoeconomic confrontation" as the primary risk for the year, the precious metal appears poised to continue its strong upward trend.

This warning comes from the World Economic Forum's latest Global Risks Report 2026, released just as business and political elites gather for their annual conference in Davos, Switzerland. The report paints a picture of deep concern among the world's experts and leaders.

The conference kicks off just days after President Donald Trump escalated his global trade war. In a social media post, Trump threatened to impose tariffs of 10%, potentially rising to 25%, on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland. The move is designed to pressure these nations into supporting his bid to annex Greenland. In response, members of the European Parliament announced they would freeze the ratification of a trade deal struck last summer between Trump and European Commission President Ursula von der Leyen.

WEF Report Signals a World on Edge

The WEF report highlights a climate of persistent uncertainty. Following geoeconomic confrontation, the top risks identified include interstate conflict, extreme weather, societal polarization, and the spread of misinformation and disinformation.

Survey data from the report reveals a pessimistic outlook:

• Next Two Years: Roughly 50% of WEF members expect a turbulent or stormy global environment, a 14-percentage-point increase from last year. Another 40% anticipate conditions will be unsettled.

• Next Ten Years: The long-term view is even more fraught, with 57% forecasting a turbulent or stormy world and 32% expecting unsettled conditions.

"A new competitive order is taking shape as major powers seek to secure their spheres of interest," said Børge Brende, President and CEO of the World Economic Forum. "This shifting landscape, where cooperation looks markedly different than it did yesterday, reflects a pragmatic reality: collaborative approaches and the spirit of dialogue remain essential."

Analysts See Gold as a Core Portfolio Asset

This environment of sustained uncertainty is a key factor driving commodity analysts to predict gold prices could surpass $5,000 an ounce in the first half of the year. The metal has already started strong, with spot gold last trading at $4,671.40 an ounce, a 1.6% gain on the day.

From Tactical Hedge to Embedded Necessity

According to Aakah Doshi, Head of Gold Strategy at State Street Investment Management, geopolitical risk is no longer just a source of temporary market noise. He explained that it has become an "embedded threat" that will provide long-term support for gold.

While gold prices may seem elevated, Doshi argues the metal remains undervalued in the broader market context.

"I would be more concerned if the S&P 500 was at March or April 2025 levels and gold was trading at 4,500," he noted. "But the fact that the S&P has touched 7,000... This gives me more confidence to hold gold because when there is a drawdown or volatility shock or liquidity event, gold can really benefit as a hedge against those tail risks."

A Strategic Revaluation Beyond Speculation

Linh Tran, Senior Market Analyst at XS.com, believes the gold rally is no longer driven by simple speculative momentum. She suggests that new highs reflect a fundamental shift in investor confidence.

"The current upside momentum is no longer anchored to short-term economic cycles, but rather to confidence in the global financial and policy framework," she stated in a note.

Tran argues that gold is undergoing a major re-evaluation, transitioning from a peripheral defensive hedge into a central pillar of risk management strategies.

"As risks stemming from unpredictable policy actions intensify and confidence in fiat currencies is increasingly tested, gold is gradually transitioning from a defensive hedge into a core asset," she added. "This implies that any pullbacks, should they occur, are more likely to reflect technical adjustments or position rebalancing rather than a reversal of the broader long-term trend."