Gold hits record highs above $3,900 per ounce amid Fed rate outlook and global uncertainty

Spot gold prices surged to a historic high above $3,900 per ounce, driven by expectations of Federal Reserve interest rate cuts and heightened global uncertainty. According to Reuters, spot gold rose 1.8% to $3,956.19 per ounce at 14:41 EST (18:41 GMT), having earlier touched $3,969.91 per ounce during trading. US gold futures for December delivery closed up 1.7% at $3,976.30 per ounce.

Edward Meir, an analyst at Marex, said political turmoil in France, rising Japanese government bond yields amid inflation concerns, and the ongoing US government shutdown are all key factors driving the gold rally. French Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after taking office, escalating political instability. Meanwhile, the US partial government shutdown has entered its sixth day, with the White House warning of potential mass furloughs of federal workers.

Gold has gained 50% this year, supported by continuous central bank purchases, strong safe-haven demand, and a weakening US dollar. Spot gold first surpassed $3,000 per ounce in March, reaching $3,800 by late September. Meir noted, “The approach towards $4,000 indicates that some funds may be attempting to push prices to this level.”

Gold, which generates no interest, thrives in low-rate environments and during periods of economic uncertainty. Investors are currently pricing in a 0.25% Fed rate cut this month, with another 0.25% reduction expected in December, according to FedWatch tools.

UBS analysts forecast that gold could reach $4,200 per ounce by year-end, citing both fundamental and momentum factors.

Other precious metals also surged: spot silver climbed 1.4% to $48.66 per ounce, marking a 14-year high, while platinum rose 1.4% to $1,626.75 and palladium jumped 4.3% to $1,315.17 per ounce.

Morning update (October 7, 2025):

Bloomberg reported that spot gold rose 0.2% to $3,968.49 per ounce at 08:07 Singapore time, continuing its path towards an all-time high since 1979. The US dollar index remained stable. Gold surged again, approaching $4,000 per ounce, as the US government shutdown and political unrest in France increased financial market uncertainty. Bullion hit $3,976.25 per ounce on Tuesday, following a 1.9% rise on Monday.