Gold has surged above $4,000 (£2,985) an ounce, hitting an all-time high. Investors are turning to the precious metal as political tensions and economic uncertainty shake global markets. The rally marks gold’s strongest climb since the 1970s. Prices have jumped nearly a third since April, when US President Donald Trump’s tariffs disrupted international trade and rattled financial systems.
US government shutdown fuels market jitters
The US government shutdown, now in its second week, is intensifying investor anxiety worldwide. Analysts say delays in key economic data have added to market uncertainty. Gold, long seen as a safe haven, continues to benefit from this 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 later date.
Political gridlock strengthens gold’s appeal
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 warned that prices could fall if the standoff ends sooner than expected.
Analysts stunned by gold’s record surge
Heng Koon How, head of markets strategy at UOB Bank, called the rally “unprecedented” and beyond forecasts. He attributed the rise to a weaker US dollar and growing activity from retail investors. Many buyers are turning to exchange-traded funds (ETFs) instead of physical gold. According to the World Gold Council, a record $64 billion has flowed into gold ETFs this year.
Demand grows from institutions 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 I expect it to rise for at least five more years,” he added.
Risks remain behind the record highs
Analysts warn that gold’s rally could stall if conditions shift. OCBC’s Wong said prices may drop if interest rates rise or geopolitical tensions ease. In April, gold fell about 6% after Trump chose not to dismiss Federal Reserve Chair Jerome Powell. “Gold serves as a hedge against uncertainty, but that hedge can quickly unwind,” Wong said.
In 2022, gold dropped from $2,000 to $1,600 an ounce after the Federal Reserve raised rates to fight post-pandemic inflation, Heng noted. A sudden spike in inflation could again force the Fed to act, threatening gold’s momentum.
Trump’s conflict with the Fed adds volatility
Wong said expectations of Federal Reserve rate cuts are boosting gold’s appeal. Yet Trump’s repeated attacks on the Fed are unsettling markets. He has accused Jerome Powell of moving too slowly and attempted to dismiss Fed Governor Lisa Cook. Wong warned that such interference “erodes 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 important.”
