Gold has smashed through the $4,000 (£2,985) mark for the first time in history. Investors are pouring money into the precious metal as fears over global politics and economic stability escalate. The surge marks gold’s strongest rally since the 1970s. Prices have jumped by nearly a third since April, when US President Donald Trump’s new tariffs disrupted world trade and unsettled markets.
Shutdown turmoil deepens investor anxiety
The US government shutdown, now in its second week, has intensified unease across financial markets. Analysts say delays in vital economic data releases have left investors uncertain about the state of the economy. Gold, long seen as a safe haven, thrives when volatility grips global markets. On Wednesday afternoon in Asia, the spot price — the current market rate for immediate delivery — rose above $4,036 an ounce. Gold futures, which reflect trader sentiment, touched the same level on 7 October. Futures contracts let investors fix a price for buying or selling gold at a future date.
Political deadlock strengthens gold’s position
Christopher Wong, a rates strategist at OCBC in Singapore, said the US shutdown is acting as a “tailwind for gold prices.” Prolonged political gridlock over government spending has pushed investors toward safer assets. During Trump’s first term, gold rose nearly 4% during a month-long shutdown. Wong noted, however, that prices might fall if the current stalemate ends more quickly than expected.
Analysts amazed by gold’s record-breaking rally
Heng Koon How, head of markets strategy at UOB Bank, said gold’s “unprecedented rally” has outpaced every forecast. He attributed the surge to a weaker US dollar and growing demand from retail investors. Not all buyers are acquiring physical gold; many are investing through exchange-traded funds (ETFs) backed by the metal. According to the World Gold Council, a record $64 billion has flowed into gold ETFs this year.
Investors of all sizes turn to gold for protection
Gregor Gregersen, founder of Silver Bullion, said his company has seen customer numbers more than double over the past year. He explained that individuals, banks, and wealthy families increasingly see gold as insurance against global uncertainty. “Most of our clients are long-term holders,” Gregersen said, adding that many keep their gold stored for more than four years. “Gold will eventually dip, but given the current conditions, I expect prices to rise for at least five more years,” he added.
The risks behind gold’s shining moment
Analysts warn that gold’s climb could stall if interest rates rise or tensions ease. OCBC’s Wong pointed out that in April, gold fell about 6% after Trump chose not to dismiss Federal Reserve Chair Jerome Powell. “Gold serves as a hedge against uncertainty, but that hedge can unwind quickly,” he said.
In 2022, gold dropped from $2,000 to $1,600 an ounce after the Federal Reserve raised interest rates to combat post-pandemic inflation, Heng noted. A sudden surge in inflation could again force the Fed to act, threatening gold’s momentum.
Trump’s battle with the Fed shakes market confidence
Wong said expectations of lower US interest rates have made gold more attractive to investors. But Trump’s intensifying attacks on the Federal Reserve are stirring unease. He has accused Jerome Powell of acting too slowly and tried to dismiss Fed Governor Lisa Cook. Wong warned that such moves “erode confidence in the Fed’s credibility as an inflation-fighting authority.” In today’s volatile world, he said, gold’s role as a shield against uncertainty “has rarely been more critical.”
