Gold prices rose above $4,000 an ounce for the first time on Wednesday, fuelled by investor demand for safe-haven assets amid rising geopolitical tensions and expectations of U.S. interest rate cuts.
Spot gold climbed 0.9% to $4,017.16 per ounce by 0442 GMT, with U.S. gold futures for December delivery up 0.9% at $4,040. The precious metal has surged 53% so far in 2025, after gaining 27% in 2024, making it one of the year’s top-performing assets.
Analysts cited a confluence of drivers behind the rally, including fears over global political instability, a weak dollar, sustained central bank buying and strong inflows into gold-backed exchange-traded funds.
"There’s so much faith in this trade right now that the market will look for the next big round number which is 5,000," said Tai Wong, an independent metals trader. He added that debt concerns, reserve diversification and a weakening dollar were likely to continue supporting gold in the medium term.
The U.S. government shutdown, now in its seventh day, has delayed key economic data, further clouding the outlook and reinforcing bets on lower interest rates. Traders are now pricing in a 25-basis-point rate cut at the Federal Reserve’s October meeting, with another expected in December.
Tim Waterer, chief market analyst at KCM Trade, said, “Rising uncertainty levels tend to fuel gains in the gold price and we are seeing this theme play out again.”
Political developments abroad are also influencing sentiment. In Japan, the weekend election of Sanae Takaichi and expectations of increased deficit spending have added to safe-haven demand, said Kyle Rodda of Capital.com.
Other precious metals also rose. Spot silver increased 1.3% to $48.44 per ounce, platinum rose 2.4% to $1,657.33, and palladium gained 2.3% to $1,368.68.
Both Goldman Sachs and UBS have raised their gold price forecasts for 2026, citing sustained central bank purchases and further monetary easing.
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Iran’s Foreign Minister Abbas Araghchi said Tehran has “no trust” in the United States and will only consider negotiations if Washington shows seriousness. His remarks came as talks on Iran’s nuclear programme continued, with Trump and Xi also opposing Iran acquiring nuclear weapons.
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Asian stocks surged to record highs on 7 May as investors priced in growing hopes of a potential Middle East peace deal, while oil prices eased and the U.S. dollar weakened amid shifting global risk sentiment.
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