Gold clinched a fresh record — pushing closer to $4,000 an ounce — as the US government shutdown and a political crisis in France injected more uncertainty into financial markets.
Bullion rose to $3,977.44 an ounce after surging 1.9 per cent on Monday. The suspension in federal operations that’s now stretching into a second week has deprived investors of key data needed to gauge the health of the US economy, while the Federal Reserve struggles to assess changing conditions. Traders are still pricing in a quarter-point cut this month, which should benefit gold as it doesn’t pay interest.
In France, Sebastien Lecornu resigned as prime minister, after failed attempts to reach a consensus on budget spending with political parties, with the deadlock thwarting attempts to rein in the largest fiscal deficit in the euro area. Meanwhile, Sanae Takaichi’s near-certain elevation as the next Japanese prime minister has also jolted financial markets.
The political shakeups in France and Japan are adding to fiscal concerns and contributing to the rally in gold, Nicky Shiels, head of research and metals strategy at MKS PAMP SA, said in a note. “A mix of retail (especially in Europe and Japan) and institutional inflows have driven” the latest surge, she said.
US President Donald Trump has set the scene for gold’s surge of around 50 per cent this year, as his aggressive moves to reshape global trade and geopolitics spurred a flight to safety and a move away from the dollar. Central banks and gold-backed exchange-traded funds have been enthusiastic buyers, while the Fed’s interest-rate cut, and the prospect of more to come, has helped recently.
“These elevated levels highlight gold’s growing strategic role as a structural component within diversified portfolios,” said Ahmad Assiri, a strategist at Pepperstone Group Ltd. Gold stands as the “best refuge” should concerns about overheated equity markets intensify, he added.
Reflecting the positive mood, Goldman Sachs Group Inc. — a long-standing bull on gold — raised its price forecast for December 2026 to $4,900 an ounce, up from $4,300, analysts said in a note, citing ETF inflows and central-bank buying.
Spot gold was little changed at $3,963.95 an ounce as of 10:27 a.m. in Singapore, with prices on track for the biggest annual gain since 1979. The Bloomberg Dollar Spot Index was steady. Silver was steady above $48 an ounce, while palladium gained and platinum was flat.
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