Gold Prices Approach $4,000 an Ounce

SadaNews - Gold prices have reached a new record level, approaching $4,000 per ounce, amid increasing uncertainty caused by the U.S. government shutdown and the political crisis in France.

Gold rose to $3,977.44 an ounce after a jump of 1.9% on Monday. The suspension of federal activities that began last week has deprived investors of essential government data needed to assess the strength of the U.S. economy, at a time when the Federal Reserve struggles to understand evolving economic developments.

Traders still expect a quarter-point interest rate cut this month, which would benefit gold as a non-yielding asset.

A Political Crisis in France

In France, Prime Minister Sébastien Lecornu resigned after failing to reach a consensus with political parties on budget spending, undermining efforts to curb the largest fiscal deficit in the eurozone.

In Japan, near-certain expectations of Sanei Takahashi taking the office of the next prime minister have sparked turmoil in the financial markets.

Nikki Shields, head of metals research and strategy at MKS PAMP SA, wrote in a note that the political volatility in France and Japan has added to financial concerns and contributed to the surge in gold, noting that "a combination of flows from retail investors, particularly in Europe and Japan, and institutions has fueled this recent rise."

Record Annual Increase Supported by Trump Policies

The note indicated that U.S. President Donald Trump was a key factor behind the gold's increase by nearly 50% this year, as his bold steps to reshape global trade and the geopolitical landscape have driven investors toward safe assets and away from the dollar.

Central banks and gold-backed exchange-traded funds were among the most active buyers, while the Fed's interest rate cuts and expectations of further reductions have supported prices in recent times.

Ahmad Al-Asiri, a strategic analyst at Pepperstone Group, stated that "the current high levels underscore the growing strategic role of gold as a structural component within diversified investment portfolios," adding that gold is considered "the best refuge" if fears about the strength of stock markets escalate.

Goldman Sachs Raises Gold Price Forecasts

In a reflection of the positive climate, Goldman Sachs has raised its gold price forecast for December 2026 to $4,900 an ounce from $4,300, according to a note from analysts who relied on increased flows into exchange-traded funds and purchases by central banks.

As of 10:27 a.m. in Singapore, spot gold stabilized at $3,963.95 an ounce, keeping prices on track for the largest annual gains since 1979.

The Bloomberg dollar index remained largely unchanged, while silver held steady above $48 an ounce, palladium rose, and platinum remained relatively unchanged.