Gold prices crossed the $4,000 mark for the first time in history on Wednesday, extending a record-breaking rally fueled by economic and geopolitical turbulence, expectations of further U.S. Federal Reserve rate cuts, and strong investor demand for safe-haven assets.
Spot gold climbed 0.9% to $4,017.16 per ounce by 0442 GMT, while U.S. gold futures for December delivery rose 0.9% to $4,040. The precious metal has soared 53% so far in 2025, after gaining 27% last year, cementing its position as one of the best-performing assets of the year.
“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 to lower rates,” said independent metals trader Tai Wong.
“There will be some bumps in the road, like a lasting truce in the Mideast or Ukraine, but the fundamental drivers, massive and growing debt, reserve diversification, and a weaker dollar, are unlikely to change in the medium term.”
Gold’s historic rally has been powered by a mix of factors: persistent political and economic uncertainty, strong central bank purchases, inflows into gold-backed exchange-traded funds (ETFs), and a softening U.S. dollar.
The ongoing U.S. government shutdown, now in its seventh day, has added to the uncertainty, delaying key economic data releases and leaving investors to rely on secondary indicators to gauge the Fed’s policy direction.
Markets are currently pricing in a 25-basis-point rate cut at the Fed’s meeting later this month, followed by another in December.
“Rising uncertainty levels tend to fuel gains in gold prices, and we are seeing this theme play out again,” said Tim Waterer, Chief Market Analyst at KCM Trade.
“Market dynamics of lower U.S. interest rates and the ongoing government shutdown are still working in favour of gold. But the temptation to take profits around the $4,000 mark poses a potential short-term risk.”
Analysts also cite a growing “fear of missing out” among investors, further propelling the rally. Political upheaval in France and Japan has intensified demand for the safe-haven metal, particularly following the election of Japan’s new leader Sanae Takaichi, which has raised expectations of increased deficit spending.
“The latest leg higher has been sparked by the election of Takaichi and the prospect of deeper deficit spending in Japan. That ties into a key theme at the moment—the ‘run it hot’ trade,” noted Capital.com analyst Kyle Rodda.
Looking ahead, analysts expect gold’s momentum to remain strong into 2026, supported by sustained central bank buying, ETF inflows, and further monetary easing. Goldman Sachs and UBS have both raised their gold price forecasts.
In other precious metals markets, spot silver gained 1.3% to $48.44 per ounce, platinum advanced 2.4% to $1,657.33, and palladium rose 2.3% to $1,368.68.
Source: Reuters
Written By Rodney Mbua
