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Gold reaches $4,000 for the first time during record-breaking run

Investors piled into gold to protect themselves from geopolitical unrest and bet on further U.S. rate cuts.

Spot gold rose 1.2%, to $4.032.46 an ounce at 0653 GMT. U.S. Gold Futures for December Delivery climbed 1.3%, to $4.054.80 an ounce.

Gold is traditionally seen as a safe haven of value in times of uncertainty. Spot gold, one of the most successful assets in 2025, is up by 53% so far this year after rising by 27% last year.

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.

The Fed is likely to continue lowering rates, so the market will be looking for the next round number of 5,000.

There will be bumps along the way, such as a lasting ceasefire in the Middle East or Ukraine, but the fundamental drivers for the trade, massive debt and increasing reserves, diversification of reserve assets, and a lower dollar, are unlikely to alter in the medium-term.

The U.S. shutdown of the government entered its seventh day Tuesday, adding to the uncertainty. The shutdown has delayed the release of important economic indicators for the world's largest economy. This forces investors to rely upon secondary, nongovernment data in order to determine the timing and magnitude of Fed rate reductions.

Investors now expect a 25 basis-point reduction at the Fed's meeting in this month. An additional 25 bp is expected in December.

Tim Waterer, KCM Trade's Chief Market Analyst, said that "rising levels of uncertainty tend to fuel gains" in gold prices.

The market dynamics of the lower U.S. rates of interest and the government shutdown continue to work in gold's favor. The temptation to sell at the $4,000 level is a short-term danger.

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

The political turmoil in France, Japan and other countries has also increased demand for safe-haven gold.

Goldman Sachs, UBS and other analysts expect that central bank purchases, strong inflows of exchange-traded fund assets backed by gold and lower U.S. rates will support the gold price in 2026.

With the $4,000 barrier breached, new technical horizons are now open. Next resistance levels can be found around $4,050 and $4,100. The former resistance zone at $3,900 is now the first support area, said Alexander Zumpfe.

Other precious metals markets saw spot silver rise 1.6%, to $48.57 an ounce. Platinum rose 1.6%, to $1644.40, and palladium increased 3.1%, to $1378.86.

(source: Reuters)