Gold futures have surged above $4,000 US per troy ounce for the first time amid the ongoing U.S. government shutdown, attracting many investors looking for a secure investment. On Tuesday morning, the commodity hit a historic high after closing at $3,960.60 per troy ounce on Monday.
The demand for gold tends to spike during periods of economic uncertainty, with anxious investors seeking stable options for their funds. Prior to the shutdown, gold and other metals like silver had already experienced significant gains due to the uncertainties surrounding the global economy caused by President Donald Trump’s tariffs.
Factors such as the potential for lower interest rates have further enhanced gold’s appeal as an investment compared to interest-bearing options. Gold futures have surged by approximately 50% since the beginning of the year, trading at around $4,013 per troy ounce as of Tuesday morning. In comparison, silver futures have seen an even larger percentage increase, up by about 60% to nearly $48 per troy ounce.
The economic upheaval, largely stemming from Trump’s trade policies, has led to escalating tariffs and increased costs, adversely affecting businesses and consumers. This situation has contributed to a decline in hiring, a rise in inflation, and a general sense of pessimism among consumers.
The current government shutdown in the U.S. has exacerbated these economic concerns, with key data delayed and federal employees facing furloughs and unpaid work as the shutdown drags on. President Trump’s threats to use the shutdown as leverage against Democrats have added to the uncertainty.
Experts like Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, attribute the surge in gold investments to the weakening U.S. dollar and the Federal Reserve’s recent rate cuts. Additionally, ongoing geopolitical tensions and strong demand from central banks worldwide have also boosted gold investments.
Staunovo highlighted that the gold rally commenced in 2022, with the freezing of Russian foreign holdings by the U.S. and Western allies during the early stages of the conflict in Ukraine serving as a significant trigger point. While gold is perceived as a safe-haven asset, investors should be mindful of its volatility, which can range between 10-15%.
In conclusion, the current economic climate, driven by geopolitical tensions and trade uncertainties, has propelled gold to record highs, making it an attractive investment option for many seeking stability in turbulent times.