Gold has surged past $4,000 (£2,985) an ounce, hitting a historic high. Investors are flocking to the precious metal amid rising fears over political instability and economic uncertainty worldwide. The rally marks gold’s strongest climb since the 1970s. Prices have jumped nearly a third since April, when US President Donald Trump’s tariffs disrupted international trade and rattled financial markets.
US shutdown heightens market anxiety
The ongoing US government shutdown, now in its second week, is increasing uncertainty across global markets. Analysts say delays in releasing key economic data have left investors uneasy. Gold, traditionally a safe haven in turbulent times, has benefited from the turmoil. On Wednesday afternoon in Asia, spot gold — the live price for immediate delivery — rose above $4,036 an ounce. Gold futures, reflecting market sentiment, hit the same level on 7 October. Futures contracts allow traders to lock in a price for future transactions.
Political deadlock strengthens gold’s appeal
Christopher Wong, rates strategist at OCBC in Singapore, described the shutdown as a “tailwind for gold prices.” He said ongoing political gridlock over public spending has driven investors toward safer assets. During Trump’s first term, gold gained nearly 4% during a similar month-long shutdown. Wong cautioned that prices could decline if the impasse ends sooner than expected.
Analysts stunned by gold’s record rally
Heng Koon How, head of markets strategy at UOB Bank, called gold’s rise “unprecedented” and far beyond forecasts. He attributed the surge to a weaker US dollar and increased participation from retail investors. Many buyers are choosing exchange-traded funds (ETFs) rather than physical gold. According to the World Gold Council, $64 billion has already been invested in gold ETFs this year — a record level.
Demand spreads from banks to everyday investors
Gregor Gregersen, founder of Silver Bullion, said his company has seen customer numbers more than double over the past year. He noted that retail investors, banks, and wealthy families increasingly view gold as protection against global instability. “Most of our clients are long-term holders,” Gregersen said, adding that many store their gold for over four years. “Gold will eventually fall, but in this environment, I expect it to keep rising for at least five years,” he added.
Gold’s glitter hides potential risks
Despite record highs, analysts warn that gold remains vulnerable. OCBC’s Wong said prices could slip if interest rates rise or tensions ease. In April, gold fell about 6% after Trump chose not to remove Federal Reserve Chair Jerome Powell. “Gold is a hedge against uncertainty, but that hedge can unwind quickly,” Wong said.
In 2022, gold plunged from $2,000 to $1,600 an ounce after the Federal Reserve raised rates to curb post-pandemic inflation, Heng noted. A sudden resurgence of inflation could again prompt the Fed to act, threatening gold’s momentum.
Trump’s pressure on the Fed adds to market volatility
Wong said expectations that the Federal Reserve will soon cut interest rates are supporting gold’s appeal. Yet Trump’s ongoing attacks on the Fed are unsettling investors. He has accused Jerome Powell of acting too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such interference “undermines confidence in the Fed’s credibility as an inflation-fighting authority.” In a world facing political tension and economic fear, he added, gold’s role as a safe haven “has never been more important.”
