Gold has broken through the $4,000 (£2,985) mark for the first time in history. Investors are seeking safety in the precious metal as political tensions and economic worries spread worldwide. The rally marks gold’s strongest surge since the 1970s. Prices have soared by almost a third since April, when US President Donald Trump’s new tariffs sent shockwaves through global trade and financial markets.
Shutdown chaos shakes investor confidence
The US government shutdown, now stretching into its second week, has heightened investor anxiety. Analysts say delays in releasing key economic data have deepened market uncertainty. Gold, traditionally viewed as a safe haven, gains strength when global markets grow volatile. On Wednesday afternoon in Asia, the spot price — the rate for immediate delivery — climbed past $4,036 an ounce. Gold futures, which indicate market expectations, hit the same level on 7 October. These contracts allow traders to fix a price for future transactions.
Political paralysis sends gold soaring
Christopher Wong, rates strategist at OCBC in Singapore, described the US shutdown as a “tailwind for gold prices.” Ongoing political deadlock over public spending has driven investors toward safer assets. During Trump’s first term, gold rose nearly 4% during a similar shutdown. Wong cautioned that if the government resolves the impasse quickly, prices could retreat.
Analysts astonished by gold’s relentless climb
Heng Koon How, head of markets strategy at UOB Bank, called the rally “unprecedented” and stronger than any forecast. He attributed the surge to a weaker US dollar and rising demand from small investors. Many buyers are turning to exchange-traded funds (ETFs) instead of physical gold. The World Gold Council reports that $64 billion has flowed into gold ETFs this year — a record high.
Gold demand spreads from banks to households
Gregor Gregersen, founder of Silver Bullion, said customer numbers have more than doubled in the past year. He noted that retail investors, banks, and wealthy families are increasingly relying on gold as protection from global instability. “Most of our clients are long-term holders,” Gregersen said, explaining that many store their gold for more than four years. “Gold will fall again at some point, but I believe it will stay on an upward path for at least five years,” he added.
Risks lurking beneath the golden surge
Experts warn that gold’s rise could face setbacks. OCBC’s Wong said prices may drop if central banks raise interest rates or if geopolitical tensions ease. In April, gold fell about 6% after Trump decided not to dismiss Federal Reserve Chair Jerome Powell. “Gold is a hedge against uncertainty, but that hedge can unravel,” Wong said.
In 2022, gold dropped from $2,000 to $1,600 an ounce after the Federal Reserve lifted interest rates to combat post-pandemic inflation, Heng noted. A sudden spike in inflation could again push the Fed to act, threatening gold’s current momentum.
Trump’s feud with the Fed fuels fresh instability
Wong said expectations that the Federal Reserve will soon cut rates have made gold even more appealing. But Trump’s escalating criticism of the central bank is unsettling investors. He has accused Jerome Powell of moving too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such attacks “undermine faith in the Fed’s credibility as an inflation-fighting institution.” In an increasingly fragile world, he added, gold’s role as a refuge “has become more essential than ever.”
