Gold’s unprecedented ascent this week to the $4,000 an ounce milestone and beyond puts it on course for its best year since the Iranian Revolution in 1979, solidifying its status as a barometer for global geopolitics and the economy.
Bullion’s 53 per cent gain so far this year follows a stellar 27 per cent rise in 2024.
The steady upward trajectory has been driven by a rush to the asset considered a safe store of value as investors seek cover from uncertainties spurred by conflicts in the Middle East, between Russia and Ukraine, political developments in the U.S., Japan and France, all supplemented by bets for more U.S. interest rate cuts.
“Gold is performing its important role as a bellwether or a barometer, which gauges when things just aren’t right,” said Ross Norman, an independent analyst.
Spot gold steadied at around $4,025 per ounce on Thursday, hitting pause after surging to an all-time high of $4,059.05 on Wednesday, as investors assessed an Israel-Hamas ceasefire deal.
“Having cleared the $4,000 hurdle, by rights gold should pause for breath. That said, it has not shown much restraint year to date,” Norman said.
Bullion has logged multiple record highs this year, shattering analyst expectations, also underpinned by expectations of U.S. interest rate cuts since that would translate into reduced opportunity cost of holding assets such as gold, which pays no interest or dividends, while also weakening the dollar.
Market participants see chances of two more rate cuts this year, with the CME FedWatch tool showing a 95 per cent chance of a 25 basis-point cut during the Federal Reserve’s upcoming meeting on October 29.
A continued rise in central bank purchases as a means to diversify assets, along with increased flow into gold-backed exchange-traded funds, has also boosted gold’s status.
Globally, inflows into gold ETFs have hit $64 billion year-to-date, according to World Gold Council data, flipping from outflows of about $23 billion over the last four years.
Gold-backed ETFs in the second-biggest bullion consumer India, meanwhile, registered their largest monthly inflow in September, taking assets under management to a record $10 billion.
And there is more room to go, market participants said.
“Investor appetite isn’t slowing down… this upward trajectory suggests more room for expansion, and less reason for it to drop,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Silver, meanwhile, was trading at $51 per ounce, after hitting its all-time high of $51.22 earlier in the session. The metal has gained 72 per cent this year, driven by the same factors driving gold and supported by underlying market tightness.
“Silver has also benefited as investors cast their sights across the precious metals complex amid the broader safe-haven play,” said Han Tan, chief market analyst at Nemo.money.
