Gold surged past the historic $4,000-per-ounce mark in Asian trade Wednesday, extending its rally as investors sought safety amid deepening global political and economic turmoil. The milestone highlights growing uncertainty around fiscal policy in major economies and shifting expectations for U.S. interest rates.
Spot gold climbed 0.6% to an all-time high of $4,010.84/oz, while December futures gained 0.7% to touch $4,033.27/oz. Analysts at ANZ said that continued expectations of a 25-basis-point rate cut this month were fueling the surge, alongside unrest in France and Japan.
“Markets are leaning heavily toward another rate cut, which supports the rally,” ANZ noted, adding that investors were turning to gold-backed ETFs as equity markets showed signs of overvaluation.
Key drivers behind gold’s rise:
- Political crises in France and Japan heightening global uncertainty
- Increased bets on further U.S. Federal Reserve rate cuts
- Investor flight from overvalued equities into gold-based assets
Political Strife Fuels Haven Demand
The rally was underpinned by mounting political instability. In Washington, the U.S. government shutdown entered its second week, with no progress on a funding bill despite President Donald Trump’s mediation efforts. Economists warned this standoff could have broader economic repercussions than past shutdowns.
In France, political tensions spiked after Prime Minister Sébastien Lecornu resigned only hours after forming a new cabinet, shaking investor confidence. Meanwhile, Japan faced its own crisis of confidence following the election of Sanae Takaichi as ruling party leader. Takaichi’s promises of expanded fiscal spending and tax breaks, despite weak government finances, raised alarms over long-term stability.
Analysts warned that rising fiscal risks across major economies were prompting a global pivot toward safe-haven assets, with gold emerging as the primary beneficiary.
Fed Outlook and Metal Market Moves
With the shutdown delaying key economic data, investors shifted focus to Federal Reserve commentary and private sector reports for market direction. Private labor data indicated slowing job growth, further reinforcing the case for another rate cut.
The Federal Reserve minutes from its September meeting, set for release Wednesday, are expected to provide fresh clues into its monetary path. Futures markets, via CME’s FedWatch tool, now price in a nearly 100% probability of another 25-basis-point cut later this month.
Other precious metals joined gold’s rally—platinum rose 2.1% to $1,661.36/oz, and silver climbed 1.4% to $48.50/oz, both marking decade highs. Copper, however, dipped slightly after a strong run, weighed by continued supply concerns from Indonesia’s Grasberg mine following a fatal accident that halted production.
As global risks intensify, gold’s record-breaking ascent underscores investor unease—and a renewed faith in the metal’s timeless role as the ultimate financial refuge