Gold Breaks $4,000 Barrier as Global Political Turmoil and Fed Cut Bets Drive Safe-Haven Surge

Gold prices soared past the $4,000-per-ounce mark for the first time in Asian trading on Wednesday, as investors flocked to safe-haven assets amid intensifying political instability in France and Japan and persistent economic uncertainty in the United States.

Spot gold advanced 0.6% to a record $4,010.84/oz, while December gold futures rose 0.7% to $4,033.27/oz, extending Tuesday’s rally that first pushed the metal beyond the symbolic threshold.

Political and Economic Tensions Fuel the Rally

Gold’s historic rise came as global political tensions mounted. France remained gripped by a leadership crisis following the shock resignation of Prime Minister Sebastien Lecornu, while in Japan, the election of Sanae Takaichi — a fiscal dove known for opposing interest rate hikes — stirred concerns over rising public debt and yen volatility.

In the U.S., the federal government shutdown entered its second week, paralyzing data releases and dampening investor confidence. Despite previous shutdowns having limited economic impact, White House officials warned that this episode could prove more damaging due to deeper funding disputes and political divisions.

Fed Cut Expectations Strengthen

The Federal Reserve’s September meeting minutes, due later Wednesday, are expected to offer insight into policymakers’ rationale behind the recent 25-bps rate cut. Traders now price in an almost 100% probability of another reduction in October, according to CME FedWatch.

The delay of key U.S. economic reports due to the shutdown has magnified the importance of Fed communication, with Chair Jerome Powell scheduled to speak Thursday. Private labor data has already indicated slowing jobs growth, bolstering the case for policy easing.

Broader Metals Mixed as Copper Retreats

The surge in gold lifted other precious metals, with platinum up 2.1% to $1,661.36/oz and silver up 1.4% to $48.50/oz, both hitting decade highs.

Industrial metals were more subdued. LME copper futures slipped 0.2% to $10,713.45 a ton, and COMEX copper fell 0.1% to $5.09 a pound, weighed down by weak manufacturing data and a prolonged production outage at Indonesia’s Grasberg mine.

Outlook

Analysts expect gold to remain well-supported as global markets contend with political instability, fiscal uncertainty, and diverging monetary paths. Unless macro conditions stabilize, the metal’s momentum could extend, with traders eyeing the $4,100 level as the next technical target.