Gold price soars to $US5300, as questions surround whether Aussie dollar rally will continue

The price of gold has continued to soar, hitting $US5300 an ounce overnight, driven by a plunging US dollar and geopolitical uncertainty.

The greenback slumped to its lowest value in nearly four years after US President Donald Trump declared this week he was not worried about the value of the American currency.

Adding to concerns on financial markets has been Trump's decision overnight to send a huge naval force towards Iran, and threatening an attack on the Middle Eastern state unless a nuclear deal is achieved.

READ MORE: Trump threatens Iran with 'armada' attack

How long can Aussie dollar surge last?

Australia's dollar, meanwhile, has risen to its highest level against its US counterpart since February 2023, buying 70.11 US cents yesterday after climbing 1.4 per cent.

But economists are uncertain whether the jump against the greenback will continue for the rest of this year.

A Commonwealth Bank of Australia investor update today says it would take a "significant shift" in economic fundamentals, such as the value of Aussie shares and commodity prices, for the dollar to achieve 75 US cents.

Instead, the bank expects the currency to trade at 70 cents against the greenback for some time.

"We expect AUD/USD to decline as 2026 progresses."

So it may be better to book that trip to the US sooner, rather than later.

READ MORE: Australian dollar cracks 70 US cents on climb to three-year high

Gold 'could hit US$6000'

The surge in gold prices and falling US dollar mark a flight from currencies and sovereign bonds - or debt securities issued by national governments, according to experts.

The chief executive of UK-based global financial advisory firm de Vere Group, Nigel Green, believes gold could reach $US6000 by the end of this year.

"Gold benefits when political signals create uncertainty about growth, inflation, and international cooperation," he said.

The jump in gold also reflects mounting concern in financial markets over government borrowing as debt levels across major economies continue to rise.

Also propelling central banks and investors to seek refuge in gold has been uncertainty in key bond markets, such as Japan.

Green believes this week's spike in the gold price is more than a blip.

"The $US5000 milestone marks a beginning rather than an endpoint. We believe $US6000 is not unrealistic by the end of the year."

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