Gold has surged past $4,000 (£2,985) an ounce, reaching an unprecedented high. Investors are moving into the precious metal as global political tensions and economic uncertainty escalate. The rally marks gold’s strongest surge since the 1970s. Prices have climbed nearly one-third since April, when US President Donald Trump’s tariffs disrupted international trade and rattled financial markets.
US government shutdown fuels market anxiety
The US government shutdown, now in its second week, has intensified investor worries. Analysts say delays in releasing key economic data have worsened uncertainty. Gold, long considered a safe haven, gains when markets face turmoil. On Wednesday afternoon in Asia, spot gold — the market price for immediate delivery — rose above $4,036 an ounce. Gold futures, which reflect market expectations, reached the same level on 7 October. Futures contracts allow traders to lock in prices for future transactions.
Political stalemate drives demand for gold
Christopher Wong, rates strategist at OCBC in Singapore, called the shutdown a “tailwind for gold prices.” He said ongoing 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 might fall if the government resolves the impasse sooner than expected.
Analysts surprised by the strength of the rally
Heng Koon How, head of markets strategy at UOB Bank, described gold’s surge as “unprecedented” and beyond forecasts. He attributed the rally to a weaker US dollar and increased activity from retail investors. Many buyers now prefer exchange-traded funds (ETFs) over physical gold. According to the World Gold Council, $64 billion has already flowed into gold ETFs this year — a record level.
Gold demand rises across institutions and households
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 a safeguard against global instability. “Most of our clients are long-term holders,” Gregersen said, adding that many store their gold for over four years. “Gold will eventually correct, but I expect it to rise for at least five more years,” he added.
Risks linger behind gold’s record highs
Despite the rally, analysts warn that gold remains vulnerable. OCBC’s Wong said prices could slip 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 curb post-pandemic inflation, Heng recalled. A sudden spike in inflation could again push the Fed to act, threatening gold’s momentum.
Trump’s conflict with the Fed heightens market volatility
Wong said expectations of rate cuts by the Federal Reserve are boosting gold’s appeal. Yet Trump’s escalating attacks on the central bank are unsettling investors. He has accused Jerome Powell of moving 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 filled with political tension and economic uncertainty, he added, gold’s role as a safe haven “has never been more vital.”
