Gold surged past $4,000 an ounce on Wednesday, reaching a new record high as investors flocked to safe-haven assets amid mounting economic and geopolitical uncertainty and growing expectations of further U.S. Federal Reserve interest rate cuts.
Spot gold rose 0.7% to $4,011.18 per ounce by 03:00 GMT, while U.S. gold futures for December delivery increased 0.7% to $4,033.40. The metal is up 53% year-to-date, following a 27% gain in 2024, underscoring gold’s traditional role as a store of value in times of instability.
“There’s so much faith in this trade right now that the market will look for the next big round number, which is 5,000, with the Fed likely to continue to lower rates,” said Tai Wong, an independent metals trader.
Wong added that potential geopolitical developments, such as a lasting truce in the Middle East or Ukraine, may cause short-term fluctuations, but fundamental drivers — including massive and growing debt, reserve diversification, and a weaker dollar — are expected to remain intact in the medium term.
The rally has been fuelled by a mix of factors, including:
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Expectations of interest rate cuts in the U.S.
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Political and economic uncertainty in major economies
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Strong central bank gold buying
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Inflows into gold exchange-traded funds (ETFs)
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A weaker U.S. dollar
The U.S. government shutdown, now in its seventh day, has further intensified uncertainty by delaying the release of key economic indicators. Investors have turned to alternative data to assess the timing and scale of Fed rate cuts, with markets now pricing in a 25-basis-point cut this month and another in December.
“Rising uncertainty levels tend to fuel gains in the gold price and we are seeing this theme play out again,” said Tim Waterer, Chief Market Analyst at KCM Trade.
“Market dynamics of lower U.S. interest rates and the ongoing government shutdown are still working in favour of gold. But the temptation to take profits around the $4,000 mark poses a potential short-term risk.”
A “fear of missing out” (FOMO) among investors has also contributed to the momentum. Meanwhile, political turmoil in France and Japan has strengthened safe-haven demand.
“The latest leg higher has been sparked by the election of Sanae Takaichi over the weekend and the prospect of deeper deficit spending in Japan. That itself ties into a key theme at the moment: the ‘run it hot’ trade,” explained Kyle Rodda, analyst at Capital.com.
Looking ahead, analysts expect strong ETF inflows, continued central bank buying, and lower U.S. interest rates to support gold prices in 2026, prompting Goldman Sachs and UBS to raise their price forecasts.
Other precious metals also gained:
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Spot silver rose 1.3% to $48.42 per ounce
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Platinum climbed 2.5% to $1,658.40
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Palladium advanced 1.8% to $1,361.89
