Gold surpasses $4,000. What's next?
Gold prices hit a new record high on Wednesday, surpassing $4,000 per ounce, as we mentioned here, reaching $4,036. This was driven by increased demand for safe havens amid global economic and political uncertainty.
Uncertainty in the US Economic Outlook
This jump comes amid a US government shutdown entering its second week, which has delayed the release of important economic data, making it difficult to assess the economic situation in the United States.
Despite this uncertain environment, investors still expect US interest rates to be cut by 25 basis points in both October and December, enhancing gold's appeal as a hedge against inflation and declining yields.
Global Tensions Fuel Gold Demand
Adding to the factors driving gold demand are political unrest in France and recent leadership changes in Japan, which are compounding the anxiety in global markets.
Gold prices have risen more than 50% since the beginning of the year, driven by rising geopolitical and trade tensions and a weaker US dollar.
Central Banks Continue Buying
Despite record prices, central banks continue to bolster their gold reserves. The People's Bank of China continued to buy the precious metal for the eleventh consecutive month in September, indicating continued confidence in gold as a long-term strategic asset.
The recent interest rate cut by the Federal Reserve also contributed to increased inflows into gold-backed exchange-traded funds (ETFs).
Gold's Future: Where Does the Price Go From Here?
Despite the strong momentum in the yellow metal, prices may experience some temporary corrections due to profit-taking by investors. However, the overall trend remains strongly bullish, given the market's excessive strength and the lack of real signs of a near-term calm.
Goldman Sachs also raised its December 2026 gold price forecast from $4,300 per ounce to $4,900, citing strong inflows from Western exchange-traded funds and central bank buying.
Will the momentum continue?
What we're seeing now is investors buying gold, despite the higher price, adding to the momentum.
The fear of missing out is pushing the market into new, unprecedented territory.
Gold stands at a historic crossroads, where exceptional economic, financial, and geopolitical factors are converging to support its upward trajectory. While $4,000 represents a historic milestone, it could be just a stop on a larger journey toward $5,000, especially with the continued low interest rate environment, escalating geopolitical tensions, and strong structural demand from central banks and institutional investors.
