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The price of gold passed $4,000 an ounce, hitting a record on Wednesday, driven by investors seeking safety from growing economic and geopolitical uncertainty, along with expectations of further interest rate cuts by the U.S. Federal Reserve.
Gold prices rose 0.9% to $4,017.16 an ounce by 04:42 GMT. U.S. gold futures for December delivery gained 0.9% to $4,040 an ounce.
Traditionally, gold is seen as a store of value during times of volatility. As one of the best-performing assets of 2025, the market price of gold has risen 53% since the beginning of the year, following a 27% increase in 2024.
“There is so much confidence in this trade now that the market will look for the next big number which is 5,000, with the Federal Reserve likely to continue cutting interest rates,” said Tai Wong, an independent metals trader.
He added that there will be some obstacles in the way, such as a lasting ceasefire in the Middle East or Ukraine, but the fundamentals of trade, massive and growing debt, reserve diversification and a weaker dollar are unlikely to change in the medium term.
The metal's rise has been driven by a number of factors, including expectations of interest rate cuts, ongoing political and economic uncertainty, strong central bank purchases, inflows into gold exchange-traded funds and a weak dollar.
The US government shutdown entered its seventh day on Tuesday. The shutdown has delayed the release of key economic indicators from the world's largest economy, forcing investors to rely on secondary, non-government data to gauge the timing and extent of interest rate cuts by the Federal Reserve.
Investors are now predicting a 25 basis point cut at the Federal Reserve meeting this month, with an additional 25 basis point cut expected in December.
“Rising levels of uncertainty tend to drive gains in the price of gold and we are seeing this theme emerge again,” said Tim Waterer, chief trading market analyst at KCM.
"The market dynamics of lower US interest rates and the ongoing government shutdown are still working in gold's favor. But the temptation to take profits around the $4,000 level poses a potential short-term risk."
A "fear of missing out" is also driving growth, analysts say.
Furthermore, political unrest in France and Japan has also increased demand for silver bullion which is considered a safe haven.
"The recent rally has been fueled by the election of Sanae Takaichi over the weekend and the prospect of deeper deficit spending in Japan. This in itself ties into a key theme at the moment: 'fire-driven' trade," said Capital.com analyst Kyle Rodda.
Analysts expect strong inflows into exchange-traded funds, supported by physical gold, purchases by central banks and the prospect of lower U.S. interest rates, to support gold prices in 2026, prompting Goldman Sachs and UBS to raise their price forecasts.
In other precious metals markets, spot silver rose 1.3% to $48.44 an ounce, platinum gained 2.4% to $1,657.33 and palladium rose 2.3% to $1,368.68. / Adapted from Reuters /
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