Gold prices surged to an all-time high during Asian trading on Wednesday, breaking above the $4,000 per ounce mark for the first time as investors flocked to safe-haven assets amid escalating political and economic instability.
Expectations of further U.S. Federal Reserve interest rate cuts also provided strong support for the metal, with markets now focused on a series of speeches from Fed officials scheduled throughout the week. Spot gold rose 0.6% to a record $4,010.84/oz, while December gold futures climbed 0.7% to $4,033.27/oz, extending Tuesday’s move past the $4,000 threshold.
“For the moment, markets are still pricing in a 25bp cut this month, which should benefit the precious metal. The political turmoil in France and Japan is adding to fiscal concerns and contributing to the rally in gold,” ANZ analysts said in a note.
“Concerns about an overvaluation in equity markets also appear to be triggering a shift into gold-backed ETFs to diversify risk,” ANZ analysts said, adding that the ongoing uncertainty surrounding the U.S. economy would likely keep demand for bullion strong.
Safe-Haven Demand Fuels Gold Rally
Investor appetite for gold has been reinforced by growing unease over the U.S. economy, as the federal government shutdown looks set to stretch into a second week. The political standoff in Congress over a funding bill continues, with little progress despite President Donald Trump’s mediation efforts.
While previous shutdowns have had limited economic fallout, White House officials have cautioned that this episode could prove more disruptive.
Tensions in France also added to global risk aversion after Prime Minister Sebastien Lecornu resigned just hours after unveiling his cabinet over the weekend, deepening the country’s political crisis.
In Japan, market uncertainty intensified following the election of Sanae Takaichi—a known fiscal dove—as leader of the ruling party. Takaichi is expected to oppose Bank of Japan rate hikes and favor expanded fiscal spending and tax incentives. Investors, however, have raised questions about how her administration will finance these policies, particularly as sentiment toward Japanese government bonds weakens.
Focus Turns to the Fed
The ongoing U.S. government shutdown has delayed the release of key economic data, pushing attention toward private labor market reports, which recently showed slowing job growth and reinforced expectations of further monetary easing by the Fed.
The minutes from the Fed’s September meeting, set for release on Wednesday, are expected to provide greater insight into the recent 25 basis point rate cut. According to CME FedWatch, markets are pricing in nearly a 100% probability of another 25 bp cut later this month. Several Fed officials are also due to speak in the coming days, including Chair Jerome Powell on Thursday.
Broader Metals Mixed
In broader metals trading, precious metals extended their rally, with spot platinum jumping 2.1% to $1,661.36/oz and spot silver gaining 1.4% to $48.4985/oz, both reaching their highest levels in more than a decade.
Copper, however, slipped after strong recent gains. Benchmark LME copper eased 0.2% to $10,713.45 per ton, while COMEX copper fell 0.1% to $5.0878 per pound. Prices remained supported by concerns over potential supply shortages following a prolonged production halt at Indonesia’s Grasberg mine, where a fatal accident in September disrupted operations.
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