US gold futures surged past $4,000 an ounce on Tuesday, driven by expectations of a Federal Reserve rate cut later this month and persistent safe-haven demand due to the ongoing US government shutdown.
Gold for December delivery settled 0.7% higher at $4,004.40/oz, after reaching as high as $4,014.60/oz.
Spot gold was up 0.6% at $3,985.82/oz at 7.48pm SA time, having reached a record $3,990.85/oz earlier in the session.
The primary market for spot gold is the London over-the-counter market, which serves as the global benchmark for pricing.
“Gold’s ongoing safe-haven flows stemming in part from the government shutdown and no real indication that it is likely to be resolved in the immediate term. So there’s still a pretty decent bid in gold,” said Peter Grant, vice-president and senior metals strategist at Zaner Metals.
Non-yielding gold, which tends to do well during times of uncertainty and in low interest rate environments, is up 51% so far this year. The rally has been driven by a cocktail of factors, including expectations of interest rate cuts, ongoing political and economic uncertainty, solid central bank buying, inflows into gold exchange traded funds (ETFs) and a weak dollar.
The US government shutdown, which entered its seventh day on Tuesday, has seen the postponement of key economic indicators, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Fed rate cuts.
Investors are now pricing in a 25 basis-point cut at the Fed meeting this month, with an additional 25 bps in December.
Meanwhile, political turmoil in France and Japan gripped currency and bond markets for a second day.
China’s central bank added gold to its reserves in September for the 11th straight month, data from the People’s Bank of China shows.
On Monday Goldman Sachs raised its December 2026 gold price forecast to $4,900/oz from $4,300/oz, citing strong ETF inflows and likely central bank buying.
Elsewhere, spot silver was down 1.4% at $47.86 per ounce, platinum fell 0.5% to $1,617.41 and palladium was up 2.1% at $1,347.52.
Reuters
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