Gold hits record high above $4,000 as investors rush for safety

WASHINGTON: Gold prices soared past the historic $4,000 mark on Wednesday as investors sought refuge from rising global uncertainty and bets strengthened that the US Federal Reserve will soon cut interest rates.

According to Reuters, spot gold climbed 0.7 percent to $4,011.18 per ounce by 0300 GMT, while US gold futures for December delivery also rose 0.7 percent to $4,033.40.

The metal has now surged an astonishing 53 percent so far this year, following a 27 percent rise in 2024, making it one of the most resilient assets in an unsettled global economy.

Growing uncertainty drives demand

Gold’s latest rally comes as investors turn away from riskier assets amid growing concerns over global debt, political instability and weakening currencies. “There’s so much faith in this trade right now that the market will look for the next big round number which is $5,000, with the Fed likely to continue lowering rates,” said independent metals trader Tai Wong.

He added that while events like a lasting truce in the Middle East or Ukraine could briefly slow the momentum, the main drivers such as high government debt, central bank diversification and a weaker dollar are expected to keep supporting prices in the medium term.

Fed cuts and government shutdown add fuel

The US government shutdown, now in its seventh day, has delayed key economic data releases, leaving investors guessing about the Fed’s next moves. Market participants now expect a 25-basis-point rate cut later this month and another in December.

“Rising uncertainty levels tend to fuel gains in the gold price and we are seeing this theme play out again,” said KCM Trade Chief Market Analyst Tim Waterer. “Lower US interest rates and the ongoing shutdown are working in favour of gold, though profit-taking around the $4,000 mark could cause some short-term volatility.”

A “fear of missing out” effect is also pushing more investors into gold, analysts noted, as the market momentum accelerates.

Political turmoil adds to safe-haven appeal

Fresh political uncertainty in Japan and France has also helped lift demand for gold. The election of Sanae Takaichi as Japan’s new leader and the possibility of deeper deficit spending have stirred concerns about future economic stability.

“The latest leg higher has been sparked by the election of Sanae Takaichi and the prospect of deeper deficit spending in Japan. That ties into a key theme at the moment: the ‘run it hot’ trade,” said Kyle Rodda, analyst at Capital.com.

Outlook remains bullish

Major investment banks, including Goldman Sachs and UBS, have raised their gold price forecasts, citing expectations of continued central bank buying, strong inflows into gold-backed exchange-traded funds and a weaker US dollar.

In other precious metals, spot silver climbed 1.3 percent to $48.42 per ounce, platinum rose 2.5 percent to $1,658.40, and palladium gained 1.8 percent to $1,361.89.

Gold price in Pakistan

Gold prices in Pakistan extended their upward streak on Tuesday, following gains in the international market, as investors sought safety in the precious metal amid mounting global uncertainty.

The price of 24-karat gold increased by Rs1,500 per tola, reaching a new all-time high of Rs416,778. Similarly, the price of 10-gramme gold rose by Rs1,286 to Rs357,319.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), a day earlier, the yellow metal had already recorded a sharp jump of Rs5,400 per tola, closing at Rs415,278 on Monday.

Meanwhile, silver prices in the local market moved in the opposite direction, falling by Rs20 per tola to settle at Rs4,929.

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