Gold extended its historic rally to break above $4,000 an ounce for the first time today, as investors piled into the safe haven to seek cover from mounting geopolitical uncertainty while betting on more US interest rate cuts.
Spot gold jumped 1.2% to $4,032.46 an ounce in early trade. US gold futures for December delivery climbed 1.3% to $4,054.80 an ounce.
Traditionally, gold is seen as a store of value during times of instability. As one of the best-performing assets of 2025, spot gold is up 53% year-to-date after rising 27% in 2024.
The rally has been driven by a cocktail of factors, including expectations of interest rate cuts, ongoing political and economic uncertainty, solid central bank buying, inflows into gold exchange-traded funds and a weak dollar.
"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 Tai Wong, an independent metals trader.
"There will be some bumps in the road like a lasting truce in the Mideast or Ukraine but the fundamental drivers of the trade, massive and growing debt, reserve diversification, and a weaker dollar are unlikely to change in the medium term," he added.
Adding to the uncertainties, the US government shutdown continues this week. The shutdown has postponed the release of key economic indicators from the world's biggest economy, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Fed rate cuts.
Investors are now pricing in a 25-basis-point cut at the Fed meeting this month, with an additional 25-bp cut anticipated 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.
"Market dynamics of lower US 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 pose a potential short-term risk."
A "fear of missing out" is also boosting the rally, analysts say.
Additionally, political turmoil in France and Japan has also boosted demand for the safe-haven bullion.
Analysts expect strong inflows into exchange-traded funds backed by physical gold, central bank buying and the prospect of lower US interest rates to support gold prices in 2026, prompting Goldman Sachs and UBS to raise their price outlooks.
"With the $4,000 barrier broken, new technical horizons have opened. The next resistance levels are seen around $4,050 to $4,100, while former resistance at $3,900 now serves as the first support zone," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.
In other precious metals markets, spot silver rose 1.6% to $48.57 an ounce, platinum gained 1.6% to $1,644.40 and palladium climbed 3.1% to $1,378.86.
