- Gold futures broke record highs amid a storm of uncertainty.
- Institutional flows into gold-backed ETFs and central bank buying keep the precious metal buoyed.
- Fed’s dovish turn and US government shutdown keep the dollar weaker and gold up.
Gold futures price broke new ground, soaring above $4,000 for the first time in history as investors fled to safety amid political turmoil, economic fragility, and Fed rate cuts. The metal is up more than 50% YTD, making it one of the top-performing assets in 2025.
Gold’s rally remains fueled by a storm of uncertainty. The US government shutdown is in its second week, which has delayed the release, forcing markets to rely on secondary indicators to assess the economy. The data blackout has increased the odds of an October rate cut, with traders pricing in an additional cut in December. Lower yields and a softer dollar are lending strength to the metal’s appeal.
According to Taylor Nugent, economist at National Australia Bank, “The rapid rise in gold prices has been supported by rising inflows into ETFs and central bank buying, including solid demand from China, as gold benefits from political, economic, and inflation uncertainty.” He further added that the mounting US fiscal concerns and doubts about Fed independence have intensified gold’s safe-haven bid.
The dovish turn by the Federal Reserve and US political gridlock have heightened the fear of institutional instability, prompting both retail investors and institutions to seek hard assets. The World Gold Council reported that a record $64 billion has flowed into gold-backed ETFs in 2025. Central banks are also heavy accumulators of gold, diversifying away from US Treasuries.
Geopolitical developments have further strengthened the case of gold as political chaos emerged in France following the resignation of Prime Minister Lecornu. Moreover, renewed fiscal stimulus expectations in Japan after the newly elected Sanae Takaichi have also increased the demand for safe-haven assets. On the other hand, ongoing regional conflicts in Ukraine and the Middle East continue to keep the risk sentiment sour.
Analysts have a consensus on gold’s medium-term bullish trend, but some warn that a resolution to the US shutdown or resurgence in inflation could trigger a pullback. However, the fundamental drivers, massive debt, reserve diversification, and a weaker dollar are unlikely to change anytime soon.