Gold has broken through the $4,000 (£2,985) mark for the first time in history. Investors are flooding into the precious metal amid deepening fears over political instability and economic uncertainty. The surge marks gold’s strongest rally since the 1970s. Prices have climbed by almost one-third since April, when US President Donald Trump’s tariffs disrupted global trade and unsettled financial markets.
Government shutdown rattles global confidence
The ongoing US government shutdown, now in its second week, is shaking investor sentiment worldwide. Analysts say the delay in publishing key economic data has worsened the sense of uncertainty. Gold, long considered a safe haven, tends to shine in turbulent times. On Wednesday afternoon in Asia, spot gold — the market price for immediate delivery — reached $4,036 an ounce. Gold futures, which signal market expectations, hit the same level on 7 October. These contracts allow traders to secure a price for future transactions.
Political gridlock sends investors running to gold
Christopher Wong, rates strategist at OCBC in Singapore, called the shutdown a “tailwind for gold prices.” He said repeated political clashes over spending have pushed investors toward safer assets. During Trump’s first term, gold gained almost 4% during a similar shutdown. Wong cautioned that prices could fall if the government quickly resolves the standoff.
Analysts shocked by strength of gold’s rise
Heng Koon How, head of markets strategy at UOB Bank, described the rally as “unprecedented” and beyond earlier forecasts. He attributed the surge to a weakening US dollar and growing participation from smaller investors. Many are choosing exchange-traded funds (ETFs) instead of physical gold. According to the World Gold Council, investors have poured a record $64 billion into gold ETFs so far this year.
Demand spreads from banks to private 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 now view gold as essential protection against global instability. “Most of our clients are long-term holders,” Gregersen said, explaining that many keep their gold for over four years. “Gold will eventually dip, but I expect it to keep rising for at least five years,” he added.
Risks remain behind gold’s glittering climb
Despite the record highs, analysts warn of potential setbacks. OCBC’s Wong said gold could decline if interest rates rise or if global tensions ease. In April, prices fell about 6% after Trump chose not to dismiss Federal Reserve Chair Jerome Powell. “Gold is a hedge against uncertainty, but that hedge can unwind fast,” Wong warned.
In 2022, gold dropped from $2,000 to $1,600 an ounce after the Federal Reserve raised rates to fight post-pandemic inflation, Heng recalled. A new surge in inflation could again push the Fed to tighten policy, threatening gold’s current momentum.
Trump’s feud with the Fed fuels new volatility
Wong said expectations of rate cuts by the Federal Reserve continue to boost gold’s appeal. Yet Trump’s repeated attacks on the Fed have unsettled markets. He has accused Jerome Powell of moving too slowly and even tried to remove Fed Governor Lisa Cook. Wong warned that such political pressure “undermines confidence in the Fed’s credibility as an inflation-fighting institution.” In a world gripped by tension and uncertainty, he added, gold’s role as a refuge “has never been more vital.”
