Gold hits record $4,000 before easing as investors take profits

Gold prices hit an all-time high this week, climbing above $4,000 an ounce for the first time as investors rushed into safe-haven assets amid deepening global uncertainty.

The rally — the strongest in nearly five decades — reflects a mix of geopolitical tension, economic worries, and growing expectations of U.S. interest rate cuts.

The surge has made gold one of the year’s top-performing assets, rising by more than 50% so far in 2025, driven by central bank purchases, demand from exchange-traded funds (ETFs), and fears of prolonged instability in major economies.

However, on Thursday, bullion slipped slightly by 0.2% to $4,029.86 per ounce in early Asian trading, as investors took profits after Wednesday’s record-breaking run to $4,059.05.

“You can’t look past the significance of the Phase-One deal between Israel and Hamas,” Kyle Rodda, analyst at Capital.com, told Reuters. “Geopolitical risks have been a key reason gold’s been moving higher, but it’s probably just a handy excuse to take profits after hitting another record.”

Geopolitics, rate cut hopes, and a weak dollar fuel rally

Gold’s rally came as the U.S. Federal Reserve signalled that risks to the job market justify potential rate cuts later this year, even as inflation remains stubborn. According to the CME FedWatch tool, markets are pricing in a 25-basis-point cut each in October and December, with probabilities of 93% and 78%, respectively.

Non-yielding gold tends to perform strongly when interest rates fall and during periods of economic or political stress. This week’s gains also followed signs of a ceasefire deal between Israel and Hamas, marking the first phase of U.S. President Donald Trump’s Gaza peace plan.

In addition, prolonged U.S. government shutdowns and political instability in Japan and France have further pushed investors toward gold, traditionally seen as a hedge against uncertainty.

“The U.S. shutdown is a tailwind for gold prices,” Christopher Wong, rates strategist at Singapore’s OCBC Bank, told the BBC. “Investors have turned to safe-haven assets like gold during previous shutdowns — and we’re seeing that again.”

Biggest rally since 1970s

Gold’s rally since April, when President Trump imposed new tariffs disrupting global trade, marks its biggest climb since the 1970s. Analysts at UOB Bank say the surge has surpassed expectations, supported by both professional and retail demand, a weaker U.S. dollar, and heavy central bank buying.

Central banks have purchased over 1,000 tonnes of gold annually since 2022, more than double the yearly average of the previous decade. Poland, Turkey, India, Azerbaijan, and China were among the top buyers last year.

A record $64 billion has also flowed into gold-backed ETFs this year, according to the World Gold Council.

“Gold will fall at some point, but given the current economic environment, it’s on an upward trend for at least five years,” said Gregor Gregersen, founder of precious metals dealer Silver Bullion, told the BBC.

Profit-taking and inflation risk

Analysts warn that while gold’s long-term fundamentals remain strong, short-term corrections are likely as investors lock in gains. A faster-than-expected U.S. government deal or a renewed rise in inflation could reverse the rally.

“We still see things as being rather constructive because all the fundamentals for gold remain pointed upwards,” said Rodda.

Spot silver rose 0.4% to $49.06 an ounce after reaching $49.57, its highest ever. Platinum fell 0.6% to $1,653.52, while palladium gained 1.1% to $1,465.73.

Despite minor pullbacks, analysts say gold’s “unprecedented rally” reflects investors’ deep concern about global markets — and their search for stability in uncertain times.