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Gold reaches $4,000 for the first time during historic flight to safety

On Wednesday, gold soared above $4,000 per ounce as investors bet on U.S. rate cuts and piled in to a historic rally. They were looking for a safe haven against geopolitical and economic uncertainties.

By 0820 GMT, spot gold had risen 1.4% to $4,039.10 an ounce. U.S. Gold Futures for December Delivery gained 1.4%, reaching $4,061.80.

Silver, which has been a strong supporter of gold, gained 2%, to reach $48.76 an ounce. This is just a little below its previous high, $49.51.

Gold is traditionally seen as an investment during periods of uncertainty. Gold spot is up 54% this year, following a 27% increase in 2024. It is the most valuable asset of 2025. It outperforms global equity markets, bitcoin, and the U.S. Dollar and crude oil.

The rally was driven by several factors including the expectation of interest rate reductions, political and economic uncertainties, central bank purchases, and inflows to gold exchange-traded fund.

StoneX analyst Rhona o'Connell stated that the background factors were the same as they had been before in terms of geopolitical uncertainties, but with the addition of the shutdown of the federal government.

The latter does not hinder strong stocks, but there will still be some risk mitigation through bullion.

The U.S. Government shutdown, which is now in its 8th day, on Wednesday, delayed the release key economic data. This forced investors to rely upon non-government sources for assessing the timing and extent of Fed rate reductions.

The markets are pricing in an interest rate cut of 25 basis points at the Fed meeting in November.

The Middle East conflict, the war in Ukraine and political turmoil in France, Japan and other countries have all contributed to the increase in demand for gold.

Michael Hsueh is a precious metals analyst with Deutsche Bank. He said that the rally was also boosted by the re-accumulation of exchange-traded fund (ETF) developed market funds for the first five years.

Goldman Sachs & UBS have raised their gold price forecasts for 2026. They expect central bank purchases, lower U.S. rates of interest and strong inflows to gold-backed ETFs to continue to support the gold price.

Nitesh Sha, commodities strategist for WisdomTree reiterated their forecast of $4,530 per ounce of gold by the end the third quarter in 2026.

Analysts say that a "fear of losing out" also drives the rally.

The UBS analyst Giovanni Staunovo said that the Fed's increased hawkishness on gold could be a headwind, but Trump's desire to lower U.S. rates should continue to increase the appeal of the gold.

Palladium rose 4.1% to 1,393.06 and platinum gained 1.7%, respectively.

(source: Reuters)