Gold prices surged to fresh record highs in Asian trading on Wednesday, surpassing the $4,000 per ounce milestone for the first time ever as investors sought refuge amid deepening political and economic instability across major economies.
The rally was supported by growing expectations that the U.S. Federal Reserve will deliver additional interest rate cuts this year, with traders closely watching a series of remarks from central bank officials over the coming days. Spot gold climbed 0.6% to a record $4,010.84/oz, while December futures advanced 0.7% to $4,033.27/oz, extending Tuesday’s breakthrough above $4,000.
“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, noting that lingering uncertainty surrounding the U.S. economy was likely to keep investor demand for bullion elevated.
Haven Demand Strengthens as Global Risks Rise
Safe-haven demand has intensified as the U.S. government shutdown heads into a second week, with no resolution in sight to the political gridlock in Congress over a funding deal. Despite mediation attempts by President Donald Trump, the stalemate shows little sign of easing.
While past shutdowns have had limited economic fallout, White House officials have warned that this one could have broader repercussions given the fragile state of the economy.
Meanwhile, France’s political crisis deepened after Prime Minister Sebastien Lecornu resigned only hours after presenting his new cabinet, amplifying investor unease across European markets.
In Japan, concerns about fiscal sustainability grew following the election of Sanae Takaichi, a fiscal dove, as leader of the ruling party. Takaichi is expected to resist Bank of Japan rate hikes and instead pursue greater spending and tax cuts. However, questions remain about how her government will finance these plans amid weakening demand for Japanese government bonds.
Markets Look to the Fed for Direction
The ongoing U.S. government shutdown has delayed key economic data releases, shifting investor focus to private labor market indicators, which recently showed a further slowdown in job creation. The weaker data has bolstered expectations for additional monetary easing.
Minutes from the Federal Reserve’s September meeting, due Wednesday, are expected to provide clarity on the recent 25 basis point rate cut. According to CME FedWatch, traders are now pricing in nearly a 100% chance of another 25 bp reduction later in October. Several Fed officials, including Chair Jerome Powell, are set to speak later this week.
Mixed Performance Across Metals
Elsewhere in the metals market, precious metals continued to rally, with platinum jumping 2.1% to $1,661.36/oz and silver gaining 1.4% to $48.4985/oz, both reaching their highest levels in over a decade.
However, copper prices edged lower after a strong run in previous sessions. LME benchmark copper slipped 0.2% to $10,713.45 per ton, while COMEX copper fell 0.1% to $5.0878 per pound. Market sentiment remains supported by supply concerns linked to prolonged disruptions at Indonesia’s Grasberg mine, following a fatal accident in September that halted production.
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