Gold prices surged to an unprecedented US$4,000 per ounce, a new all-time high as investors flocked to safe havens amid heightened geopolitical tensions and a growing trend of de-dollarization globally. The spike is being linked to multiple macro pressures, especially political gridlock in the U.S. that forced a partial government shutdown.
Since the start of the year, gold has climbed nearly 50 percent, propelled by safe-haven demand even as U.S. federal operations grind to a halt. ING analysts point to global economic uncertainty as a prime driver, with the U.S. shutdown compounding investor jitters.
Dilin Wu, research strategist at Pepperstone, emphasized that market participants will be watching closely for developments on government funding and central bank communications in the coming days.
The shutdown has delayed key data releases — including payroll figures — complicating the outlook for monetary policy. Traders have turned to alternative indicators to gauge momentum, while the Fed faces difficulty in navigating policy decisions with limited data flow.
Many market watchers expect the Fed to deliver a 0.25 percentage point rate cut this month, which would further amplify gold’s appeal (since gold carries no yield). Policy uncertainty and rising bets on easing have bolstered demand for non-interest-bearing assets like gold.
Institutional flows into gold ETFs surged. Last week, gold-backed exchange-traded funds expanded further, pushing total ETF holdings to their highest level since September 2022. There is speculative room for further inflows, as they remain below peaks seen in 2020.
The current rally has been dramatic: gold has more than doubled in under two years, driven by central bank purchases (as countries diversify away from the dollar), aggressive U.S. trade policies under former President Trump, and ongoing conflicts in the Middle East and Ukraine.
Looking forward, central banks remain active buyers. For instance, the People’s Bank of China extended its gold-purchasing streak for an 11th consecutive month in September, even as prices hit record highs.
Broader risk dynamics continue to favor gold. Persistent trade disputes, NATO–Russia tension, and other geopolitical flashpoints support higher defensive allocations. These “risk premia” make it challenging for investors to reduce exposure to safe-haven assets, even if macro data temporarily favors risk.
Analysts remain bullish on gold’s medium-term outlook, albeit with caution toward short-term retracements. Having set new records, the market may enter a consolidation phase. Still, structural tailwinds—central bank demand, ETF accumulation, and supply constraints—suggest further upside remains possible.
