Gold prices surged to historic levels on Wednesday, approaching the $4,000-per-ounce mark, as the United States entered its first government shutdown in nearly seven years. The standoff in Washington came after lawmakers failed to reach an agreement on federal funding, raising uncertainty across global markets. Gold futures closed at a record $3,897.50 per ounce, while spot gold traded at $3,866.66, marking a nearly 50% increase since the start of the year.
The timing of the shutdown is particularly significant for investors. Critical U.S. jobs data, scheduled for release on Friday, will now be delayed, complicating the Federal Reserve’s policy outlook just weeks ahead of its next meeting. Meanwhile, President Donald Trump has indicated he may use the shutdown to cut a substantial number of federal employees, intensifying concerns over economic stability. Market watchers note that previous shutdowns, while usually having minimal lasting impact, have occasionally triggered volatility in equities and fixed-income markets.
Analysts say the shutdown is fueling gold’s record-breaking rally, but it is only one factor among many driving demand for the precious metal. “Gold’s status as a safe haven is well publicized, but the rise over the last few years has been truly astounding,” said Michael Field, chief equity strategist at Morningstar. He added that ongoing geopolitical tensions, political instability in Europe, and newly imposed tariffs have all contributed to a climate where investors are increasingly turning to gold for security.
Industry experts see further upside ahead. Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, believes gold could soon surpass $4,000 per ounce. “Since the beginning of the year, investors have actively joined the market, accelerating the move upward,” he said. Gijsels highlighted that gold-related investments currently make up only around 2% of the average portfolio, suggesting significant room for growth as investors diversify away from traditional 60/40 stock-bond allocations.
Major financial institutions, including UBS, anticipate that gold’s bull run will continue through 2026. UBS strategist Joni Teves noted that ongoing dollar weakness, declining real interest rates, and the Fed’s easing cycle should support further gains. “Gold is becoming a core part of strategic asset allocations globally,” she said, adding that while short-term corrections may occur, prices are expected to stabilize at historically high levels over the long term, marking a new era for the precious metal.
source: cnbc