Gold futures surged to an all-time high on Tuesday, briefly surpassing the $4,000-per-ounce mark as investors flocked to safe-haven assets amid escalating political and economic uncertainty worldwide and growing expectations of additional U.S. interest rate cuts.
By 10:02 ET (14:02 GMT), gold futures were up 0.6% at $3,999.85 per troy ounce, while spot gold advanced 0.5% to $3,979.88 per ounce.
The metal’s latest rally has been supported by mounting political turmoil in major economies, including the U.S., France, and Japan. An ongoing U.S. government shutdown and renewed speculation about a Federal Reserve rate cut later this month have strengthened gold’s traditional role as a store of value during periods of instability.
Markets now widely expect the Fed to cut rates by 25 basis points at its October 28–29 meeting, according to CME’s FedWatch Tool. The central bank already restarted an easing cycle in September and signaled that further reductions could follow before year-end — a backdrop that favors non-yielding assets like gold.
Despite the government shutdown, some Fed-related data will still be released today, including the New York Fed’s consumer expectations survey. Several Fed officials are also scheduled to speak, though analysts say the lack of fresh data may limit the impact of their remarks on rate expectations.
Further support came from China, where the People’s Bank of China (PBOC) extended its gold-buying streak into an 11th consecutive month. The central bank’s holdings rose to 74.06 million fine troy ounces at the end of September, up from 74.02 million in August. The value of its gold reserves also climbed sharply, reflecting the rally in prices.
China’s continued purchases are viewed as part of a broader effort to diversify its foreign reserves away from the U.S. dollar and Treasuries, amid deteriorating relations with Washington.
Political unrest lifts gold further
According to analysts at ING, “political shakeups in France and Japan […] fueling fiscal concerns” have further underpinned gold prices, alongside “a surge in demand from both retail investors and institutional inflows in Europe and Japan.”
In France, political tensions have escalated following the unexpected resignation of Prime Minister Sébastien Lecornu. President Emmanuel Macron has asked Lecornu to continue talks with political parties in hopes of building a new governing majority, though his role during negotiations remains unclear. There is growing speculation that France may hold a snap parliamentary election, with both far-right and far-left parties pushing for change.
In Japan, Sanae Takaichi, a fiscal dove, was elected as the new leader of the ruling Liberal Democratic Party, setting her up to become Japan’s first female prime minister. The yen weakened sharply following her victory, while Japanese government bond prices declined on doubts over how she plans to finance her agenda of stimulus spending and tax cuts.
The global wave of political uncertainty has kept investors anchored to gold, driving the precious metal to fresh records. Silver and platinum have also posted decade highs in recent sessions.
Meanwhile, copper prices edged higher after Freeport-McMoRan (NYSE:FCX) provided no timeline for restarting operations at its Grasberg mine in Indonesia, one of the world’s largest copper producers, following a fatal accident in early September that halted output.
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