Gold prices have soared to record highs, topping $4,000 an ounce, as investors express growing concern over the U.S. economy and political uncertainty. The precious metal has gained about 53% this year, far outpacing the S&P 500’s 15% rise. Analysts say the surge reflects investors’ search for stability amid mixed economic signals.
According to FactSet data, gold touched $4,078 on Wednesday, and some experts believe the rally could continue. Bret Kenwell, an analyst at eToro, noted that gold’s sharp climb from $2,800 to $4,000 in less than a year highlights market unease.
Analysts link the rally to worries about the U.S. economy, including the ongoing government shutdown and fears of slower growth. Nigel Green, CEO of deVere Group, said political uncertainty in Washington has weakened investor confidence. “Gold represents protection from that uncertainty,” he added, emphasizing its role as a safe haven asset.
Economists also warn that the shutdown could hurt the U.S. economy further. Federal agencies are not releasing key data, making it harder to assess the country’s financial health. S&P Global Ratings estimated that every week of closure could reduce GDP growth by up to 0.2 percentage points.
Another major factor is the Federal Reserve’s recent decision to cut interest rates. Lower borrowing costs tend to make gold more appealing since investors lose less from holding non-yielding assets. Rising inflation pressures, fueled by tariffs, have further boosted gold’s appeal as a hedge.
Global demand also plays a part. Central banks, particularly in emerging markets, are buying large amounts of gold to reduce reliance on the U.S. dollar. Experts believe this steady accumulation supports the market, though it may not continue indefinitely.
Despite the impressive rally, some analysts caution that gold prices can be volatile. Still, many expect the metal to rise further in the coming months if economic and political instability persists.
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