Gold prices soared to a new historic high, crossing $4,000 for the first time to close at $4,043.30 per troy ounce, as escalating global economic and political uncertainty fueled demand for safe-haven assets. This significant rally, the largest since the 1970s, is primarily driven by the prolonged U.S. government shutdown, strong market expectations for a 25-basis-point Federal Reserve interest rate cut, and substantial year-to-date gold ETF inflows of $64 billion, including a record $17.3 billion in September. The precious metal's ascent reflects investor concerns amid delayed U.S. economic data and broader international instability.
(RTTNews) - Gold prices soared on Wednesday - crossing the $4,000 mark for the first time - to close at a new historic high as the global economic scenario gets more uncertain in the wake of the ongoing U.S. government shutdown and political upheaval in major economies. Front Month Comex Gold for October delivery surged by $66.70 (or 1.68%) to $4,043.30 per troy ounce. Notably, today's value is a new record close for gold price, which has increased for four consecutive sessions. Front Month Comex Silver for October delivery skyrocketed by $1.4770 (or 3.13%) to $48.656 per troy ounce. The U.S. government shutdown entered its eighth day today. A disagreement between Republicans and Democrats over an extension of enhanced Obamacare tax credits has resulted in a crucial short-term spending bill being stalled from passing. This resulted in the closure of U.S. government since October 1. Across the U.S., various non-essential services have been halted. While more than 2 million federal employees remain unpaid, around 750,000 have been furloughed. U.S. President Donald Trump had earlier warned of massive downsizing of the government and has now indicated that he could block furloughed employees from receiving their pay even if the shutdown is over. This shutdown has come at a time when the U.S. economy is already reeling under uncertainty due to tariffs. Compounding the economic uncertainty is the inordinate delay in the release of key economic data - namely non-farm payrolls, initial jobless claims, and inflation figures. Data released by the Mortgage Bankers Association of America today revealed that the MBA Purchase Index decreased to 170.60 points in October from 172.70 points, the previous week. The volume of mortgage applications also saw a decline by 4.7% for the week ending October 3, as the recent uptick in mortgage rates continued to deter prospective buyer. Even in the absence of data, markets are now betting on additional rate cuts by the Fed on top of its most recent September reduction. According to CME Group's FedWatch Tool, investors are betting on a 94.6% chance of a 25-basis-point interest rate cut at the Federal Reserve's October 28-29 meeting. On the political front, this Monday, French Prime Minister Sebastien Lecornu announced his resignation after just 26 days in office, becoming the third PM within a year to be out of office after failing to table a budget. France's economy is saddled with around 3.4 trillion Euros as debt (nearly 114% of GDP). In Japan, on October 4, Sanae Takaichi emerged victorious to become the first female Prime Minister of Japan. Her moves are closely watched as she faces an arduous task of rebuilding the nation's economy which is overloaded with debt, equaling nearly 200% of its GDP. In the ongoing Russia-Ukraine war, Ukraine shelled Russia's Belgorod region. Both nations are now focusing on attacking each other's oil and energy facilities and infrastructures. Israel and Palestinian Hamas militant group are engaged in negotiations to end their mutual conflict, hosted by Egypt. Reportedly, the talks are progressing towards a peaceful end to the war. According to World Gold Council data, gold ETF inflows have hit $64 billion year-to-date globally with a record $17.3 billion coming in September alone. Gold, considered to be a non-yielding but reliable safe-haven asset during turbulent economic times, is seeing its biggest rally since the 1970s. The recent upswing for the precious metal has been driven by a combination of multiple factors, including expectations for U.S. interest rate cuts, global political and economic uncertainty, increasing central bank purchases, and huge Exchange-Traded Fund inflows. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Gold prices surged to a new historic high of $4,043.30 per troy ounce, marking a $66.70 (1.68%) increase and its fourth consecutive session of gains, with Comex Silver also rising significantly by 3.13% to $48.656. This rally is primarily driven by escalating global economic uncertainty and political upheaval, boosting demand for precious metals as safe-haven assets. This represents gold's biggest rally since the 1970s. The prolonged U.S. government shutdown, now in its eighth day due to a dispute over Obamacare tax credits, has idled 750,000 federal employees and delayed crucial economic data, exacerbating domestic economic uncertainty. Further indicating economic softness, the MBA Purchase Index decreased to 170.60 points from 172.70, alongside a 4.7% decline in mortgage applications. Globally, political instability, including the resignation of French Prime Minister Sebastien Lecornu after just 26 days amid high national debt (114% of GDP) and Japan's new PM Sanae Takaichi facing a 200% GDP debt burden, contributes to risk aversion. Against this backdrop, markets are pricing in a 94.6% chance of a 25-basis-point interest rate cut by the Federal Reserve at its October meeting. Record gold ETF inflows, totaling $64 billion year-to-date globally with a remarkable $17.3 billion in September alone, underscore the robust investor demand for gold. This substantial accumulation reflects a flight to safety amidst a confluence of U.S. economic and political risks, broader global instability, and expectations of monetary easing.
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