Gold futures have surged above $4,000 US per troy ounce for the first time amid the ongoing U.S. government shutdown, attracting investors looking for safe havens to park their funds. The commodity reached a new peak on Tuesday morning after closing at $3,960.60 per troy ounce the day before.
Investors flock to gold during times of uncertainty, boosting its sales significantly. Even prior to the shutdown, gold and other metals like silver had experienced substantial gains due to the trade tensions created by President Donald Trump’s tariffs, which have cast doubt on the global economic outlook.
Recent expectations of lower interest rates have further enhanced gold’s appeal compared to interest-bearing investments. Gold futures have surged by around 50 percent since the beginning of the year, now trading at approximately $4,013 per troy ounce. Silver has also seen significant gains, with its futures up by about 60 percent, reaching close to $48 per troy ounce.
The economic turbulence, largely stemming from Trump’s trade policies, has led to increased inflation and weakened job prospects, prompting a surge in gold investments as a hedge against inflation. The ongoing government shutdown has exacerbated economic concerns, with delayed data releases and federal employees facing furloughs and pay uncertainties.
Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, attributes the gold surge to the weakening U.S. dollar and anticipated rate cuts by the Federal Reserve. Investments in gold have also been bolstered by strong demand from central banks worldwide and geopolitical tensions in regions like Gaza and Ukraine.
Staunovo highlighted that the gold rally commenced in 2022, triggered by the freezing of approximately $300 billion in Russian foreign holdings by the U.S. and its allies at the onset of the Ukraine conflict. While gold is considered a safe haven asset, it comes with a volatility of 10-15 percent, with physical gold items like coins or one-gram bars displaying wider price ranges between buying and selling.
Overall, gold continues to be viewed as a stable investment, particularly during times of global uncertainty, leading even major retail outlets like Costco to venture into gold sales.