Gold prices soared past the historic $4,000 an ounce mark on Wednesday, as global investors turned to the precious metal amid deepening economic and geopolitical uncertainty and growing expectations of U.S. Federal Reserve rate cuts.

Spot gold climbed 0.7% to $4,011.18 per ounce by 0300 GMT, while U.S. gold futures for December delivery rose to $4,033.40 per ounce. The surge marks a significant milestone in gold’s historic rally, which has seen the metal jump 53% year-to-date, after a 27% rise in 2024.

Traditionally viewed as a store of value during times of instability, gold’s latest surge underscores widespread investor unease amid a volatile economic and political landscape.

Factors behind the surge

Market analysts say gold’s rally is fueled by a combination of interest rate cut expectations, solid central bank buying, ETF inflows, and a weaker U.S. dollar.

“The market will look for the next big round number, which is 5,000, with the Fed likely to continue lowering rates,” said independent metals trader Tai Wong. He noted that while geopolitical stability could cause temporary pullbacks, “massive and growing debt, reserve diversification, and a weaker dollar” will likely sustain momentum.

The ongoing U.S. government shutdown, now in its seventh day, has compounded uncertainty, delaying key economic reports and leaving investors reliant on secondary data to gauge the Fed’s next moves.

Investors are now betting on a 25-basis-point rate cut at the upcoming Federal Reserve meeting this month, followed by another cut in December.

According to Tim Waterer, Chief Market Analyst at KCM Trade, “Rising uncertainty levels tend to fuel gains in gold prices, and we are seeing this theme play out again.” He added that while the “temptation to take profits” around $4,000 could cause short-term volatility, the broader trend remains bullish.

Political turmoil adds to safe-haven demand

Beyond U.S. policy uncertainty, political developments in France and Japan have further strengthened gold’s appeal.

“The latest leg higher has been sparked by the election of Sanae Takaichi and the prospect of deeper deficit spending in Japan,” said Kyle Rodda, an analyst at Capital.com. He linked the move to a broader global theme of the ‘run it hot’ trade, where governments are willing to tolerate inflation for economic growth.

This, combined with rising fiscal deficits and mounting debt concerns worldwide, continues to push investors toward assets viewed as secure.

Other precious metals follow suit

The rally has also spilled over into other precious metals.

Spot silver gained 1.3% to $48.42 per ounce
Platinum rose 2.5% to $1,658.40
Palladium increased 1.8% to $1,361.89

Analysts expect these metals to benefit from similar macroeconomic drivers, especially if central banks continue their diversification strategies and monetary easing policies.

Financial institutions like Goldman Sachs and UBS have revised their outlooks upward, citing continued ETF inflows, central bank demand, and lower U.S. interest rates as supportive factors for gold through 2026.

With global uncertainties unlikely to ease soon, many investors see gold maintaining its momentum — possibly testing even higher levels if monetary policy continues to loosen.