Gold prices have climbed above $4,000 an ounce, a record high that indicates growing investor fear of the U.S. economy and politics.
The price of the precious metal, up 53% this year alone, is significantly higher than the S&P 500’s 15% increase during the same period. Through Wednesday, gold hit $4,078 an ounce, and analysts believe the rally could be far from over.
Historically considered a refuge from economic turmoil and inflationary times, gold’s recent appreciation is in a period where the American economy seems pretty stable. The stock market is strong, growth has been robust, and inflation has been in check. Yet, experts say this run is based on more fundamental issues.
Bret Kenwell, an investment analyst at eToro U.S., commented that gold began the year around $2,800 per ounce and has since risen about 50%. The rise is attributed to a mix of economic and political uncertainty, deteriorating confidence in the traditional markets, and anticipation of looser monetary policy.
deVere Group CEO Nigel Green cited the current U.S. government shutdown as a prime cause for investor jitters. “What’s happened in Washington has reminded investors that promises made by politicians do not add up to economic security,” Green noted. “Gold is insurance against that uncertainty, but its value now also indicates how much confidence has been lost in other assets.”
Economists caution that the shutdown, now in its second week, has disrupted access to crucial economic data, making it more difficult to gauge the economy’s actual health. Convera FX and macro strategist Kevin Ford said the absence of federal reporting has obscured the economic outlook. S&P Global Ratings estimated the shutdown would reduce GDP growth by as much as 0.2 percentage points for each week the shutdown continues.
Adding to the uncertainty, the Federal Reserve lowered interest rates in September for the first time since 2024 and indicated further cuts may be on the way. Lower rates typically make the dollar weaker and gold more inviting, as investors are not giving up higher yields on bonds. “Investors are now perceiving gold as a better hedge than Treasuries,” said Bart Melek, TD Securities head of commodity strategy, adding that “increasing inflation pressures from fresh U.S. tariffs” are also boosting gold.
While that was happening, global demand for gold skyrocketed. Central banks have been purchasing gold aggressively, according to analysts, who pointed to geopolitical tensions and the war in Ukraine as the drivers. UBS Global Wealth Management’s Giovanni Staunovo clarified that the shift started in 2022 when Western countries froze about $300 billion of Russian assets. Since then, central banks have gone on to accumulate close to 1,000 tons of gold every year with the goal of lessening dependence on the U.S. dollar and building up financial resilience.
All these combined factors have laid a solid foundation for gold’s continued rally. UBS’s Ulrike Hoffmann-Burchardi foresees gold prices potentially hitting $4,200 per ounce in the coming months, with Goldman Sachs seeing it touch $4,900 by late 2026.
However, investors are warned by experts not to overinvest. While gold is considered a safe bet, it does fluctuate, and prices can vary by 10–15%. Staunovo further added that small physical gold investments like coins and 1-gram bars have wider price spreads, which can eat into profits.
Although the history-making $4,000 level records investor unease and changing global trends, it also marks gold’s timeless appeal as a buffer and as a declaration of prudence in times of economic and political turmoil.
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