Gold has surged past $4,000 (£2,985) an ounce, reaching a historic high. Investors are turning to the precious metal as political tensions and economic uncertainty rattle markets worldwide. 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 global trade and unsettled financial systems.
Government shutdown fuels market anxiety
The US government shutdown, now in its second week, is heightening investor worries. Analysts say delays in releasing key economic data have amplified market uncertainty. Gold, traditionally a safe haven, benefits from global volatility. On Wednesday afternoon in Asia, spot gold — the live market price for immediate delivery — rose above $4,036 an ounce. Gold futures, reflecting market sentiment, reached the same level on 7 October. Futures allow traders to lock in prices for future delivery.
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 retreat if the impasse ends sooner than expected.
Analysts astonished by gold’s rally
Heng Koon How, head of markets strategy at UOB Bank, called the surge “unprecedented” and beyond forecasts. He linked the rise to a weakening US dollar and growing retail investor activity. Many buyers are now turning to exchange-traded funds (ETFs) instead of physical gold. According to the World Gold Council, a record $64 billion has already been invested in gold ETFs this year.
Demand spreads from institutions to households
Gregor Gregersen, founder of Silver Bullion, said his company has seen customer numbers more than double over 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 despite record highs
Analysts warn that gold’s rally could stall if conditions change. OCBC’s Wong said prices may fall if interest rates rise or 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 unwind quickly,” 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 noted. A sudden rise in inflation could again force the Fed to act, threatening gold’s momentum.
Trump’s feud with the Fed adds volatility
Wong said expectations that the Federal Reserve will cut rates are supporting gold’s rise. Yet Trump’s ongoing attacks on the central bank 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 crucial.”
