Gold prices edged higher in early Asian trading Tuesday, hovering close to an all-time peak near $4,000 per ounce. Growing political instability in the U.S., France, and Japan, combined with rising bets on U.S. interest rate cuts, is fueling investor appetite for the safe-haven metal.
Spot gold rose 0.4% to $3,974.57 per ounce after reaching $3,977.45 earlier in the day. December gold futures increased 0.6% to $3,998.12 per ounce by 01:02 ET, briefly touching $4,000.05.
The People’s Bank of China (PBOC) continued to support the rally by extending its gold-buying streak for an eleventh straight month. This consistent demand highlights a broader global shift toward bullion amid geopolitical and economic uncertainty.
Key drivers behind gold’s surge:
- Political turmoil in major economies fueling risk aversion
- Continued gold accumulation by the PBOC
- Rising expectations of multiple U.S. rate cuts in coming months
Political Instability Elevates Global Risk
The political landscape in several major economies turned volatile, boosting gold’s safe-haven appeal. In the United States, the ongoing government shutdown shows little sign of resolution, intensifying fears of fiscal gridlock.
In France, Prime Minister Sébastien Lecornu’s abrupt resignation has left President Emmanuel Macron’s administration scrambling to restore stability. Calls for snap elections are mounting from both far-left and far-right factions, adding further uncertainty.
Meanwhile, in Japan, fiscal dove Sanae Takaichi became the new leader of the ruling Liberal Democratic Party—poised to become the nation’s first female prime minister. While her pro-stimulus stance sparked optimism in Japanese stocks, it also weakened the yen and sent bond yields higher, raising questions about fiscal sustainability.
Broader Metals Market Gains Momentum
Gold’s rally has also spilled over into other metals. Platinum rose 0.5% to $1,632.51 per ounce, and silver edged up 0.1% to $48.56. Copper markets advanced as well—London Metal Exchange benchmark copper futures climbed 0.7% to $10,724.65 per ton, while COMEX copper gained 0.8% to $5.0820 per pound.
Copper prices were further supported by supply concerns after Freeport-McMoRan (NYSE: FCX) failed to provide clarity on when operations would resume at Indonesia’s Grasberg mine following a deadly accident last month.
China’s gold holdings rose to 74.06 million fine troy ounces in September, up from 74.02 million in August—reinforcing Beijing’s intent to diversify away from U.S. dollar assets.