{"id":482302,"date":"2025-10-08T06:54:16","date_gmt":"2025-10-08T06:54:16","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/482302\/"},"modified":"2025-10-08T06:54:16","modified_gmt":"2025-10-08T06:54:16","slug":"gold-tops-us4000-for-first-time-fuelled-by-us-shutdown","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/482302\/","title":{"rendered":"Gold tops US$4,000 for first time fuelled by US shutdown"},"content":{"rendered":"

(Oct 8):\u00a0Spot gold smashed through US$4,000 (RM16,876) an ounce for the first time, as concerns over the US economy and a government shutdown added fresh momentum to a scorching rally.<\/p>\n

It\u2019s a milestone for bullion, which traded below US$2,000 just two years ago, with returns that now outstrip those for equities this century. Gold has jumped more than 50% this year in the face of uncertainties over global trade, the\u00a0Federal Reserve\u2019s\u00a0independence,\u00a0and US fiscal stability.<\/p>\n

Heightened geopolitical tensions have also boosted demand for haven assets this year, while\u00a0central banks\u00a0have continued to buy the precious metal at an elevated pace.\u00a0<\/p>\n

The rally has taken on extra urgency, as investors seek protection from potential market shocks following the government\u00a0funding impasse\u00a0in Washington. The start of the Fed\u2019s monetary easing cycle has also been a boon for gold, which doesn\u2019t pay interest. Investors have responded by piling into exchange-traded funds (ETFs), with bullion-backed ETFs seeing their biggest monthly inflow in more than three years in September.<\/p>\n

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\u201cGold breaking US$4,000 isn\u2019t just about fear \u2014 it\u2019s about reallocation,\u201d said Charu Chanana, a strategist at Saxo Capital Markets Pte Ltd. \u201cWith economic data on pause and rate cuts on the horizon, real yields are easing, while AI (artificial intelligence)-heavy equities look stretched. Central banks built the base for this rally, but retail and ETFs are now driving the next leg.\u201d<\/p>\n

Bullion climbed as much as 1.1% to US$4,026.69 an ounce on Wednesday, and was trading at US$4,025.86 as of 1pm\u00a0in Singapore.<\/p>\n

Jumps in the price of gold typically track broader economic and political stresses. The metal breached US$1,000 an ounce in the aftermath of the global financial crisis, US$2,000 during the Covid pandemic, and US$3,000 as the Trump administration\u2019s tariff plans washed over global markets in March.<\/p>\n

The precious metal has now broken past US$4,000 against the backdrop of, among other things, US President Donald Trump\u2019s assault on the Fed, including threats against Fed chair Jerome Powell and a push to oust Fed governor Lisa Cook, the clearest test so far of the US central bank\u2019s autonomy.<\/p>\n

A pliant Fed that would lower rates and spur higher inflation could set up a Goldilocks situation for gold. Bullion is seen as an inflation hedge and is usually weighed down by high borrowing costs, which make cash or bonds more appealing.\u00a0<\/p>\n

\u201cWe expect gold to reach a cyclical peak when there is greatest market concern about the outlook for Fed independence,\u201d Macquarie Bank Ltd\u00a0analysts wrote in a Sept\u00a030 note. \u201cIn the event, however, that a compromised Fed were to make clear policy errors, gold\u2019s performance should of course be even stronger.\u201d<\/p>\n

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Bullion is on pace for its best annual performance since the 1970s, a decade when rapid inflation and the end of the gold standard sparked a 15-fold rally of the precious metal. At that time, then US president Richard Nixon pressured the Fed to lower rates. The central bank under then-chair Arthur Burns made only \u201climited efforts\u201d to maintain independence and ultimately enabled volatile inflation for \u201cpolitical reasons,\u201d according to\u00a0a recent court submission\u00a0from various monetary policy luminaries.<\/p>\n

\u201cThe reason that investors are buying gold \u2014 and should be buying gold \u2014 is because of its diversification qualities,\u201d said Stephen Miller, an investment strategy advisor at GSFM. \u201cThat sentiment is in its early stages, and gold will get increasing acceptance as part and parcel of prudent investing behaviour,\u201d he said, adding he could see prices reaching US$4,500 by the middle of next year.<\/p>\n

Billionaire Ray Dalio said Tuesday that gold is \u201ccertainly\u201d more of a safe haven than the dollar, and the record-setting rally echoes the 1970s. The remarks from the founder of hedge-fund firm Bridgewater Associates came after Citadel founder Ken Griffin said that bullion\u2019s rise reflected anxiety about the US currency.\u00a0<\/p>\n

\u201cThe metal\u2019s climb to the US$4,000 milestone reflects not only surging safe-haven demand, but also a deepening distrust in paper assets as fiscal risks and geopolitical tensions intensify,\u201d said Hebe Chen, an analyst at Vantage Markets in Melbourne. \u201cIn the short term, a consolidation phase looks likely after such a relentless advance.\u201d<\/p>\n

Central banks have been\u00a0a key driver of bullion\u2019s rally, flipping from net sellers to net buyers following the global financial crisis. The pace of buying doubled after the US and its allies froze Russia\u2019s foreign-exchange reserves in 2022, following the full-scale invasion of Ukraine. That pushed many central banks to consider diversifying, while inflation and speculation that the American government would treat foreign creditors\u00a0less favourably\u00a0further highlighted bullion\u2019s appeal to policymakers.<\/p>\n

Elevated central bank buying is a \u201cstructural shift in reserve management behaviour, and we do not expect a near-term reversal,\u201d Lina Thomas, a commodities strategist at Goldman Sachs Group Inc, wrote in a September note. \u201cOur base case assumes that the current trend in official sector accumulation continues for another three years,\u201d Thomas said.<\/p>\n

Goldman raised its gold forecast for December 2026 to US$4,900 an ounce this week, up from US$4,300.<\/p>\n

Among other precious metals, silver climbed 1.4% to US$48.49 an ounce, while platinum and palladium advanced. The Bloomberg Dollar Spot Index rose 0.2%.<\/p>\n

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