Key Points
- Gold has broken through the $ 4,000-per-ounce level for the first time in history.
- The price has increased by more than 50% this year, driven by a range of economic and political concerns.
- The recent U.S. government shutdown and the start of Fed rate cuts have added fuel to the rally.
- Gold’s returns are now far outpacing those of stocks, and some analysts predict even more gains.
Gold prices have surged past the $ 4,000-per-ounce mark for the first time, as a perfect storm of economic worries, a U.S. government shutdown, and political uncertainty sends investors flocking to the traditional safe-haven asset. The milestone caps a scorching rally that has seen bullion jump more than 50% this year.
Just two years ago, gold was trading below $2,000 an ounce. Now, its returns are far outpacing stocks. The rally has been fueled by a long list of concerns: global trade tensions, doubts about the Federal Reserve’s independence, and America’s own shaky fiscal situation.
The recent government funding impasse in Washington has only added to the sense of urgency.
The Fed’s move to start cutting interest rates has also been a major boon for gold, which doesn’t pay interest and becomes more attractive when rates are low. Investors are piling in, with gold-backed ETFs seeing their biggest monthly inflows in over three years.
But it’s not just individual investors. Central banks around the world have also been buying gold at a rapid pace, a trend that accelerated after the U.S. froze Russia’s foreign reserves in 2022. This has led many countries to diversify their own reserves away from the dollar.
With billionaire investors like Ray Dalio calling gold a better haven than the dollar and Goldman Sachs raising its price forecast to $4,900, the precious metal’s historic run may not be over yet.
