Gold has surged past $4,000 (£2,985) an ounce, reaching an unprecedented high. Investors are rushing to the precious metal as political instability and economic uncertainty rock global markets. The rally marks gold’s strongest surge since the 1970s. Prices have climbed nearly a third since April, when US President Donald Trump’s tariffs disrupted international trade and rattled financial systems.
US government shutdown heightens market fears
The US government shutdown, now in its second week, is fueling investor anxiety worldwide. Analysts say delays in releasing key economic data have intensified uncertainty. Gold, long regarded as a safe haven, continues to gain from market volatility. On Wednesday afternoon in Asia, spot gold — the live price for immediate delivery — surpassed $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 delivery at a future date.
Political gridlock drives demand for gold
Christopher Wong, rates strategist at OCBC in Singapore, described the shutdown as a “tailwind for gold prices.” He said repeated 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 cautioned that prices could fall if the impasse ends sooner than expected.
Analysts surprised by gold’s unprecedented rally
Heng Koon How, head of markets strategy at UOB Bank, called the surge “unprecedented” and beyond forecasts. He attributed the rise to a weakening US dollar and growing retail investor participation. Many buyers now prefer exchange-traded funds (ETFs) instead of physical gold. According to the World Gold Council, a record $64 billion has already flowed into gold ETFs this year.
Demand grows from banks to retail investors
Gregor Gregersen, founder of Silver Bullion, said his company has seen customer numbers more than double in 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 persist despite record highs
Analysts warn that gold’s rally could stall if market conditions shift. OCBC’s Wong said prices may fall if interest rates rise or geopolitical 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 quickly unwind,” 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 recalled. A sudden spike in inflation could again push the Fed to act, threatening gold’s momentum.
Trump’s pressure on the Fed adds market volatility
Wong said expectations that the Federal Reserve will cut rates are boosting gold’s appeal. Yet Trump’s repeated attacks on the Fed are unsettling investors. He has accused Jerome Powell of acting too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such interference “undermines confidence in the Fed’s credibility as an inflation-fighting authority.” In a world marked by political tension and economic uncertainty, he added, gold’s role as a safe haven “has never been more critical.”
