Gold has surged above $4,000 (£2,985) an ounce, hitting a historic high. Investors are flocking to the precious metal amid growing political tensions and economic instability worldwide. The rally marks gold’s steepest climb since the 1970s. Prices have jumped nearly one-third since April, when US President Donald Trump’s tariffs disrupted global trade and unsettled financial markets.
US government shutdown intensifies market unease
The US government shutdown, now in its second week, is driving global investor anxiety. Analysts say delays in key economic data have added to market uncertainty. Gold, widely seen as a safe haven, continues to gain as volatility spreads. On Wednesday afternoon in Asia, spot gold — the live market price for immediate delivery — rose above $4,036 an ounce. Gold futures, reflecting market sentiment, reached the same level on 7 October. Futures contracts allow traders to lock in prices for future transactions.
Political stalemate strengthens gold’s appeal
Christopher Wong, rates strategist at OCBC in Singapore, said the shutdown is acting as a “tailwind for gold prices.” He explained that repeated political clashes over government spending have pushed investors toward safer assets. During Trump’s first term, gold rose nearly 4% during a similar month-long shutdown. Wong warned that prices could retreat if the standoff ends sooner than expected.
Analysts amazed by the scale of the rally
Heng Koon How, head of markets strategy at UOB Bank, described gold’s surge as “unprecedented” and far beyond forecasts. He attributed the rise to a weakening US dollar and a surge in retail investor activity. Many buyers now prefer exchange-traded funds (ETFs) instead of physical gold. According to the World Gold Council, $64 billion has already flowed into gold ETFs this year — a record level.
Gold demand rises across banks and retail 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 economic instability. “Most of our clients are long-term holders,” Gregersen said, adding that many store their gold for over four years. “Gold will eventually dip, but in this environment, I expect it to rise for at least five more years,” he added.
Risks remain despite record highs
Analysts warn that gold’s rally could lose momentum if conditions shift. OCBC’s Wong said prices may fall if interest rates rise or political tensions ease. In April, gold dropped about 6% after Trump chose not to dismiss Federal Reserve Chair Jerome Powell. “Gold is a hedge against uncertainty, but that hedge can unwind quickly,” Wong said.
In 2022, gold fell 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 push the Fed to act, threatening gold’s momentum.
Trump’s attacks on the Fed heighten volatility
Wong said expectations of Federal Reserve rate cuts are making gold more attractive. Yet Trump’s ongoing criticism of the central bank is unsettling markets. He has accused Jerome Powell of moving too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such actions “erode confidence in the Fed’s credibility as an inflation-fighting institution.” In a world marked by political tension and economic uncertainty, he added, gold’s role as a safe haven “has never been more essential.”
