Gold Breaks $4,000, Record-Breaking Rally
The spot gold price officially broke $4,000/oz for the first time, briefly touching $4,021 and last hovering around $4,018 midday Singapore time. This marks a significant milestone for the precious metal, which was below $2,000 two years ago, with year-to-date returns exceeding 50%, outperforming stocks.
The main drivers: the prolonged US government shutdown, concerns about the direction of the economy, and the start of the Fed's easing cycle, which has weakened real yields—friendly conditions for zero-coupon assets like gold. Gold-backed ETFs have also been flooded with funds; September recorded the largest monthly inflow in more than three years, fueling the rally.
In addition to macro factors, the market is also weighing the issue of the Fed's independence amid political tensions in the US. Concerns that the central bank could be pushed to lower interest rates more quickly—despite the risk of fueling inflation—have also boosted hedging interest. Macquarie analysts believe that gold tends to peak when concerns about the Fed's independence are highest.
Historically, gold surges have often occurred during times of economic and political stress: $1,000 after the global financial crisis, $2,000 during the pandemic, $3,000 during the shock of trade tariffs, and now $4,000 amid budget impasses and policy uncertainty. Some market experts also believe this rally reflects concerns about the dollar and the buildup of systemic risk.
On the fundamental side, central banks have remained major buyers since the financial crisis, with the pace of accumulation accelerating after Russia's foreign exchange reserve freeze in 2022—triggering reserve diversification. Looking ahead, short-term consolidation is likely after the relentless rally, but structural support—rate cuts, ETF inflows, and central bank purchases—still maintains an upward bias for gold. (asd)
Source: Newsmaker.id
