Gold futures climbed to a historic milestone on Tuesday, briefly breaking through the $4,000-per-ounce barrier for the first time, as investors sought refuge from mounting political uncertainty and economic instability across major global markets. Expectations of further U.S. interest rate cuts also added momentum to the rally.
By 10:02 ET (14:02 GMT), gold futures were up 0.6% to $3,999.85 per troy ounce, while spot gold advanced 0.5% to $3,979.88 per ounce, hovering just below record highs.
The surge in bullion prices reflects a growing appetite for safe-haven assets, fueled by the U.S. government shutdown, persistent geopolitical tensions, and speculation that the Federal Reserve will deliver another rate cut later this month.
According to CME’s FedWatch Tool, traders see a strong likelihood that the Fed will reduce rates by 25 basis points at its October 28–29 meeting. The central bank already resumed monetary easing in September and has hinted that more cuts may follow before year-end — a supportive backdrop for gold, which thrives when yields fall.
While the shutdown has delayed several key U.S. data releases, the New York Fed’s consumer expectations survey is still expected today, along with remarks from multiple Fed officials. However, analysts note that without fresh data, their comments are unlikely to meaningfully shift market sentiment.
China extends gold-buying streak
Gold also gained support from renewed central bank demand, with the People’s Bank of China (PBOC) expanding its gold reserves for the 11th consecutive month. Holdings rose to 74.06 million fine troy ounces at the end of September, up from 74.02 million a month earlier. The value of its reserves also climbed in line with rising bullion prices.
China’s steady accumulation of gold is viewed as a strategic move to diversify away from U.S. dollar assets, particularly as relations between Beijing and Washington remain strained.
Political uncertainty in France and Japan adds fuel
Analysts at ING said that “political shakeups in France and Japan […] fueling fiscal concerns” have provided additional support for gold, alongside “a surge in demand from both retail investors and institutional inflows in Europe and Japan.”
In France, markets remain unsettled following the abrupt resignation of Prime Minister Sébastien Lecornu, who has been asked by President Emmanuel Macron to continue negotiations with rival parties in an attempt to form a new governing coalition. The turmoil has revived speculation about a snap parliamentary election, with mounting pressure from both far-right and far-left groups.
In Japan, the election of Sanae Takaichi as leader of the ruling Liberal Democratic Party — paving the way for her to become Japan’s first female prime minister — initially lifted local stocks but sent the yen tumbling and bond yields lower. Investors are skeptical about how she will finance her proposed stimulus and tax cut measures, raising fresh fiscal concerns.
The backdrop of political volatility and macroeconomic uncertainty has solidified gold’s status as a preferred hedge, pushing it to unprecedented levels. Silver and platinum have also continued to advance after reaching decade highs in recent sessions.
Meanwhile, copper prices edged higher after Freeport-McMoRan (NYSE:FCX) offered no update on when operations might resume at its Grasberg mine in Indonesia, one of the world’s largest copper sites, which has been idle since a fatal accident in early September.
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