Stephen Azeyi
Gold futures closed at a staggering $4,004.40 per ounce on Tuesday, marking the first time the precious metal has surpassed the $4,000 threshold and capping an eight-week rally that has seen prices climb more than 50% this year. The surge comes as the U.S. government shutdown stretches into its eighth day, stoking fears of disrupted economic data and policy gridlock that could ripple through global markets.
Investors have piled into gold as a bulwark against a cocktail of uncertainties: a weakening dollar, which has dropped 10% this year on the U.S. Dollar Index; persistent inflation that refuses to cool; and geopolitical flashpoints from the Middle East to Ukraine. Central banks, led by heavy buyers like China, have accelerated purchases to diversify away from U.S. Treasurys— a move accelerated by sanctions on Russia following its 2022 invasion of Ukraine. Tuesday’s intraday peak hit $4,014.60 before a slight pullback, with spot gold trading around $4,007 early Wednesday as the shutdown shows no signs of resolution.
The rally isn’t just about fear—it’s fueled by policy shifts. The Federal Reserve’s September rate cut, the first of the year, has made yield-bearing assets like Treasury bills less appealing, pushing more money toward non-yielding gold. Markets now price in two more cuts by year-end, with the fed funds rate hovering at 4.00%-4.25% ahead of the October 29 meeting. Add to that President Trump’s threats to withhold federal workers’ backpay to force a shutdown end, and you’ve got a recipe for heightened volatility.
Experts see the momentum continuing, though not without risks. Ray Dalio, founder of Bridgewater Associates, advised allocating about 15% of portfolios to gold at the Greenwich Economic Forum, arguing it shines when stocks falter and debt becomes a poor store of value. The Economic Times forecasts elevated prices through 2025, driven by ongoing instability and central bank hoarding, potentially pushing gold toward $4,200 by mid-year. Yet Bank of America strikes a cautious note, warning of “uptrend exhaustion” near $4,000 that could trigger a fourth-quarter correction as profit-taking sets in.
For everyday investors, the question is timing. “Gold’s not just a hedge anymore—it’s a statement on how shaky things feel,” said one analyst at FOREX.com, where the metal’s overbought rally now tests key resistance levels. With the shutdown pausing critical reports like jobs data, the path forward remains murky. But one thing’s clear: at $4,000 and counting, gold is the asset everyone’s watching.
