Gold futures rose above US$4,000 an ounce for the first time, as many investors looked for a safe place to park their money as the US government shutdown continues.
The commodity jumped on Tuesday morning to hit a record high. The spot gold price in New York had previously closed at $3,960.60 per ounce – the benchmark for measuring precious metals – on Monday.
Gold sales can rise sharply when nervous investors look for safe investments for their money.
Even before the lockdown, the asset – and other metals such as silver – saw broad gains over the past year, as President Donald Trump’s barrage of tariffs created uncertainty about the outlook for the global economy.
More recently, the prospect of lower interest rates has also made gold a more attractive investment than interest-bearing investments.
Why did prices rise this year?
Gold futures are up about 50 percent since the start of 2025 — trading at about $4,013 an ounce as of around 11:30 a.m. EST Tuesday. This is higher than about $2,670 seen at the beginning of January.
Other precious metals also made gains, with silver seeing a larger percentage jump year-to-date. Silver futures rose about 60 percent, trading near $48 an ounce on Tuesday morning.
Much of the recent economic turmoil has spilled over into Trump’s trade wars. Since the start of 2025, the president’s steep new tariffs on goods coming into the United States from around the world have strained businesses and consumers alike — driving up costs and helping to weaken the labor market.
As a result, the employment rate fell while inflation rose again, and gold is considered a hedge against inflation. An increasing number of consumers are expressing pessimism about the future.
The current US government shutdown has heightened these concerns. Major economic data has been delayed — and dozens of federal employees are already feeling the effects of furloughs and unpaid work throughout the shutdown, which has no immediate end in sight.
Trump also threatened to use the shutdown to conduct mass firings and possibly permanently close offices in an attempt to punish Democrats for voting against the Republican legislation.
“Safe Haven Origin”
Giovanni Stanovo, commodity analyst at UBS Global Wealth Management, also points to continued US dollar weakness and renewed interest rate cuts by the Federal Reserve. Last month, the Fed cut its key interest rate by a quarter of a percentage point — and it predicted it would do so twice more this year.
Investments in gold have also been driven by other factors over time. Analysts have previously pointed to strong demand for gold from central banks around the world, including amid rising geopolitical tensions, such as the ongoing wars in Gaza and Ukraine.
Gold has long been seen as a stable investment, and at a time of global uncertainty, it has become so popular that big-box stores like Costco have jumped on the bandwagon.
“The gold rally has begun in 2022,” Stonovo said via email on Tuesday. He noted that the “trigger point” was when the United States and other Western allies moved to freeze about $300 billion in Russian foreign property at the beginning of the war in Ukraine.
“Many market participants view gold as a safe-haven asset. But investors should be aware that its volatility is between 10 and 15 percent,” Stonovo added, noting that smaller quantities of physical gold, such as one-gram gold coins or bullion, also have larger ranges between buying and selling prices.
https://i.cbc.ca/1.5190145.1742497088!/fileImage/httpImage/image.jpg_gen/derivatives/16x9_1180/off-the-charts-gold.jpg?im=Resize%3D620
Source link