Spot gold prices breached the US$4,000 threshold for the first time during Asian trade on Wednesday, extending its record-breaking rally as investors poured into the precious metal amid mounting global uncertainty and expectations of United States Federal Reserve rate cuts.
By 3:40 pm AEDT (4:40 am GMT), spot gold was trading $34.34 higher, or 0.9%, at US$4,018.75 per ounce.
The surge marks a historic moment for the yellow metal, which has soared 53.2% year-to-date.
The latest leg up in gold prices follows heightened concerns over looming mass layoffs among U.S. federal employees as the government shutdown drags into its second week.
The extended shutdown, coupled with delayed economic data releases, has strengthened expectations that the Federal Reserve will deliver two rate cuts this year.
Markets are now pricing in a 95.7% probability of such moves at the 28-29 October policy meeting, according to the CME Group FedWatch Tool.
Safe-haven flows into both gold and the U.S. dollar have intensified, particularly amid ongoing political instability in France and Japan.
Meanwhile, continued gold purchases by global central banks have added further upward momentum.
Still, gold’s relentless rally could face a short-term pause as the metal is technically heavily overbought on daily charts, raising the risk of profit-taking before another leg higher.
Looking ahead, speeches from Fed officials later this week will be closely monitored for fresh clues about the central bank’s stance, particularly in the absence of official data releases during the shutdown.
