Gold hits US$4,000 an ounce for the first time

[CNN] – Gold prices hit US$4,000 per ounce Tuesday for the very first time, driven by strong investment demand amid broader geopolitical and economic uncertainty, along with expectations of further interest rate cuts from the Federal Reserve.

Gold has climbed 51% so far this year on sizable central bank buying, increased demand for gold-backed exchange-traded funds, a weaker dollar and growing interest from retail investors seeking to hedge amid rising trade and geopolitical tensions. During the first quarter of the year, gold posted its strongest quarterly return since 1986.

Gold thrives in a low interest rate environment and during economic uncertainty. It is considered a resilient investment and a hedge against inflation, with investors betting it will retain its value when prices rise.

The government shutdown has left traders and policymakers without any federal data, including the crucial monthly jobs report. Key inflation figures for the month of September are due next week. That has forced investors to rely on secondary, non-government data to gauge the timing and extent of Fed rate cuts.

Markets continue to price in a quarter-point cut at the Fed’s October 28-29 meeting and a similar-sized reduction at its December meeting.

“I see gold reaching $4,300 per ounce over the next six months as the US dollar is expected to continue to depreciate,” said Michael Langford, chief investment officer at Scorpion Minerals.

Billionaire investor Ken Griffin said Monday the development of gold as a safer asset than the dollar is “really concerning.”

“We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk,” he said in an interview with Bloomberg.

Goldman Sachs on Monday raised its December 2026 price forecast for gold to $4,900 per ounce from $4,300.

China’s central bank added gold to its reserves in September for the 11th straight month, data from the People’s Bank of China showed.