Gold Soars Above $4000 an Ounce for the First Time in History
Gold broke the $4000 an ounce barrier for the first time ever on Wednesday, marking a historic record in trading characterized by a strong investor shift towards safe havens, amid a murky economic and geopolitical environment, and bolstered expectations of the U.S. Federal Reserve continuing to cut interest rates.
In trading details, spot gold prices jumped by 0.8% to reach $4017.89 an ounce. Meanwhile, December gold futures rose by 0.5% to record $4025 an ounce.
The yellow metal received a strong boost from two main trends: increased purchases from central banks globally, and renewed interest in gold-backed exchange-traded funds (ETFs). Additionally, the weakness of the U.S. dollar and increased demand from individual investors supported the upward trajectory.
The drivers of the rise were not limited to monetary factors alone, as political unrest in France and Japan also played a role in enhancing demand for gold as a safe haven. Moreover, the ongoing government shutdown in the United States for the seventh day, followed by delays in releasing key economic data, led investors to rely on secondary indicators to estimate the timing and extent of interest rate cuts, further intensifying demand for the precious metal.
In this context, market participants expect the U.S. Federal Reserve to cut interest rates by 25 basis points at its meeting this month, followed by a similar additional cut in December.
Regarding this exceptional performance, Tai Wong, an independent metals trader, told Reuters: "There is currently strong confidence in this trend to the extent that the market is anticipating the next big target at the $5000 level, amid expectations that the U.S. Federal Reserve will continue to lower interest rates."
Wong added: "Some obstacles may arise, such as reaching a permanent ceasefire in the Middle East or Ukraine, but it is unlikely that the fundamental factors driving the market, such as debt inflation, diversification of reserves, and the weakness of the dollar in the medium term, will change."
On the other hand, analysts believe that the phenomenon of "fear of missing out" (FOMO) adds additional momentum to the rise. In this regard, Giovanni Stonevo, an analyst at UBS Bank, commented: "What we are seeing now is that investors are buying gold despite its high price, which increases the strength of the upward trend."
It is worth noting that gold, which is traditionally considered a safe haven and a store of value during periods of instability, has risen by 52% since the beginning of the year, after achieving gains of 27% during the year 2024 alone.
In a related context, silver rose in spot transactions by 0.5% to $48.03 an ounce, while platinum increased by 2.2% to $1653.21, and palladium rose by 1.3% to $1355.32.
