Gold has rocketed above $4,000 (£2,985) an ounce for the first time in history. Investors are rushing to the precious metal as political divisions and economic worries shake confidence in global markets. The rally marks gold’s steepest rise since the 1970s. Prices have jumped nearly 30% since April, when US President Donald Trump’s tariffs disrupted international trade and unsettled investors worldwide.
Shutdown chaos deepens global market fears
The US government shutdown, now stretching into its second week, has fueled growing market unease. Analysts say delays in critical economic data have worsened the uncertainty. Gold, long seen as a reliable refuge during crises, continues to benefit from this instability. On Wednesday afternoon in Asia, spot gold — the live price for immediate delivery — rose beyond $4,036 an ounce. Gold futures, which reflect market expectations, touched the same level on 7 October. Futures contracts allow traders to fix a price for delivery at a later date.
Political deadlock sends investors to safe havens
Christopher Wong, rates strategist at OCBC in Singapore, said the US shutdown is acting as a “tailwind for gold prices.” He explained that repeated political clashes over spending in Washington have pushed investors toward safe assets. During Trump’s first term, gold gained nearly 4% during a similar month-long shutdown. Wong warned that prices could fall if the government ends the impasse sooner than markets expect.
Analysts surprised by the power of gold’s surge
Heng Koon How, head of markets strategy at UOB Bank, described the current rally as “unprecedented” and well beyond analysts’ 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) over physical gold. The World Gold Council said investors have funneled a record $64 billion into gold ETFs so far this year.
Gold buying spreads from banks to ordinary investors
Gregor Gregersen, founder of Silver Bullion, said his firm’s customer base has more than doubled in the past year. He noted that retail investors, banks, and wealthy families increasingly see gold as protection against economic shocks. “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 climate, I believe it will keep rising for at least five years,” he added.
Behind the shine, risks still loom
Despite record highs, analysts warn that gold’s surge could reverse. OCBC’s Wong said prices might fall if central banks raise interest rates or if political tensions ease. In April, gold dropped around 6% after Trump decided 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 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 in inflation could again force the Fed to act, threatening gold’s remarkable run.
Trump’s pressure on the Fed heightens volatility
Wong said growing expectations of rate cuts by the Federal Reserve have made gold more attractive. Yet Trump’s ongoing conflict with the Fed is unsettling markets. He has accused Jerome Powell of acting too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such political interference “undermines faith in the Fed’s credibility as an inflation-fighting institution.” In a world gripped by rising tension and economic fear, he added, gold’s role as a safe haven “has never been more vital.”
