Gold Tops $4,000 for First Time Fueled by US Shutdown
(Bloomberg) -- Spot gold smashed through $4,000 an ounce for the first time, as concerns over the US economy and a government shutdown added fresh momentum to a scorching rally.
It’s a milestone for bullion, which traded below $2,000 just two years ago, with returns that now well outstrip those for equities this century. Gold has jumped more than 54% this year in the face of uncertainties over global trade, the Federal Reserve’s independence and US fiscal stability.
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Heightened geopolitical tensions have also boosted demand for haven assets this year, while central banks have continued to buy the precious metal at an elevated pace.
The rally has taken on extra urgency as investors seek protection from potential market shocks following the government funding impasse in Washington. The start of the Fed’s monetary easing cycle has also been a boon for gold, which doesn’t pay interest. Investors have responded by piling into exchange-traded funds, with bullion-backed ETFs seeing their biggest monthly inflow in more than three years in September.
“Gold breaking $4,000 isn’t just about fear — it’s about reallocation,” said Charu Chanana, a strategist at Saxo Capital Markets Pte. “With economic data on pause and rate cuts on the horizon, real yields are easing, while AI-heavy equities look stretched. Central banks built the base for this rally, but retail and ETFs are now driving the next leg.”
Spot gold rose as much as 1.9% to a new peak of $4,059.31 an ounce Wednesday and traded at $4052.26 as of 1:22 p.m. in New York.
The price of gold typically track broader economic and political stresses. The metal breached $1,000 an ounce in the aftermath of the global financial crisis, $2,000 during the Covid pandemic, and $3,000 as the Trump administration’s tariff plans washed over global markets in March.
The precious metal has now broken past $4,000 against the backdrop of, among other things, US President Donald Trump’s assault on the Fed, including threats against Chair Jerome Powell and a push to oust Governor Lisa Cook, the clearest test so far of the US central bank’s autonomy.
A pliant Fed that would lower rates and spur higher inflation could set up a Goldilocks situation for gold. Bullion is seen as an inflation hedge but is also weighed down by high borrowing costs, which make cash or bonds more appealing.
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