Gold has smashed through the $4,000 (£2,985) mark for the first time ever. Investors are rushing to the precious metal as political tensions and economic worries spread across the globe. The surge marks gold’s strongest rally since the 1970s. Prices have jumped by nearly one-third since April, when US President Donald Trump’s new tariffs disrupted world trade and unsettled markets.
Shutdown turmoil rattles global markets
The ongoing US government shutdown, now entering its second week, has deepened investor anxiety. Analysts say delays in releasing key economic data have added to the uncertainty. Gold, seen as a safe haven during market turbulence, continues to benefit from the instability. On Wednesday afternoon in Asia, spot gold — the live market price for immediate delivery — climbed above $4,036 an ounce. Gold futures, which reflect investor sentiment, reached the same level on 7 October. Futures allow traders to lock in prices for future transactions.
Political paralysis fuels gold’s rally
Christopher Wong, rates strategist at OCBC in Singapore, said the shutdown is providing a “tailwind for gold prices.” Repeated clashes in Washington over public spending have driven investors toward safe assets. During Trump’s first term, gold rose nearly 4% during a similar month-long shutdown. Wong warned that if the standoff ends sooner than expected, gold prices could retreat.
Analysts astonished by strength of gold’s rise
Heng Koon How, head of markets strategy at UOB Bank, described the rally as “unprecedented” and far stronger than experts predicted. He said the surge reflects a weakening US dollar and growing demand from retail investors. Many buyers now prefer exchange-traded funds (ETFs) instead of physical gold. The World Gold Council reported that $64 billion has been invested in gold ETFs so far this year — a new record.
From banks to families, gold buying surges
Gregor Gregersen, founder of Silver Bullion, said his company has seen customer numbers more than double in the past year. He said banks, retail investors, and wealthy families are turning to gold as protection against global instability. “Most of our clients are long-term holders,” Gregersen said, noting that many store their gold for more than four years. “Gold will eventually correct, but in this environment, I see it rising for at least five more years,” he added.
Warnings emerge despite record-breaking highs
Analysts caution that gold’s rally could reverse if economic conditions shift. OCBC’s Wong said prices may fall if central banks raise interest rates or if political tensions cool. In April, gold dropped about 6% after Trump decided not to dismiss Federal Reserve Chair Jerome Powell. “Gold is a hedge against uncertainty, but that hedge can disappear quickly,” Wong said.
In 2022, gold’s value plunged from $2,000 to $1,600 an ounce after the Federal Reserve raised rates to fight post-pandemic inflation, Heng recalled. A sudden rise in inflation now could again prompt the Fed to tighten policy, threatening gold’s momentum.
Trump’s battle with the Fed adds to the storm
Wong said investors expect the Federal Reserve to cut interest rates soon, making gold more attractive. But Trump’s escalating criticism of the Fed has unsettled markets further. He has accused Jerome Powell of acting too slowly and attempted to fire Fed Governor Lisa Cook. Wong warned that such interference “undermines faith in the Fed’s credibility as an inflation-fighting authority.” In today’s tense and unpredictable world, he added, gold’s role as a safe haven “has become more crucial than ever.”
