🥇​​​​​​​Gold breaks $4000 for the first time!

The price of gold has surpassed the $4,000 per ounce level for the first time in history, a symbolic milestone and a direct result of escalating global economic and political uncertainty. The gains recorded by the world’s foremost precious metal now exceed 50% year-to-date, marking its best annual performance since 1979. While there have been several shifts of 30-40% in the past, an annual return exceeding 50% has not been achieved outside the 1970s. Although the price was already rising last year and at the start of this year, the main rally commenced in August, coinciding with the Federal Reserve’s policy pivot and the implementation of Donald Trump’s tariffs. The current US government shutdown further exacerbates the atmosphere of uncertainty.

Key Growth Drivers

• Safe-Haven Status: Gold is strengthening its position as a "safe haven" amid economic uncertainty—triggered not only by US domestic issues but also by geopolitical tensions, notably across Europe and Asia.

• Central Bank and Investor Demand: Central banks and individual investors are increasing gold purchases, treating the metal as a hedge against the depreciation of fiat currency and rising inflation. Poland and China are once again major buyers this year. Although the pace of central bank accumulation has slowed, combined with physical and ETF investor demand, it remains the strongest upward demand force.

• Dollar Weakness and Fed Policy: The projected decline in the US Dollar’s value in 2025 and the prospect of further interest rate cuts by the Federal Reserve bolster gold demand. Currently, the market is focused on the quantity of cuts, rather than when the easing cycle will end. Furthermore, the US administration’s questioning of the Fed's credibility and the erosion of the dollar’s reserve currency status is spurring gold and other metals higher.

Historical Dynamics and Outlook

• Investment Inflows: Strong investment demand, particularly for Gold ETFs, has contributed to the largest quarterly inflows of capital in several decades.

• Price Targets: Gold broke out to new highs for the thirteenth time in September alone. Analysts do not rule out a move toward $4,300 in the coming months. Goldman Sachs indicated that, under favourable conditions, gold could reach $5,000 by mid-next year, with its base-case scenario assuming a target of $4,900 by the end of next year.

• Correction Warnings: Recent reports from institutions advise caution—Bank of America warns of the risk of a correction following the dynamic rally. Goldman Sachs and JP Morgan also caution against potential overvaluation. Nevertheless, there are currently no apparent factors that could trigger a correction. This would require a very strong dollar appreciation, a crash on Wall Street (driving demand for cash, similar to the pandemic), or the neutralisation of geopolitical risk factors. None of these factors, however, appear to be on the immediate horizon.

Gold briefly pierced the $4,000 spot price just before 4:00 AM CET, with the breach extending by almost 1%. Currently, the largest corrections within the last few hours' uptrend suggest that the $4,000 mark will hold as support in the event of an extended pullback currently forming, just before the start of the European session.