Why Did Gold Reach a Record High Above $3,900?
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Synopsis
Gold prices have surged to a new record, exceeding $3,900 per ounce, amid fears of a prolonged US government shutdown and expectations of further interest rate cuts by the Federal Reserve. Discover what factors are driving this remarkable rise and what it means for investors.
Key Takeaways
- Gold prices reached a record high above $3,900 per ounce.
- Investor demand surged due to fears of a prolonged US government shutdown.
- Anticipations of further interest rate cuts from the Federal Reserve contributed to the rise.
- Gold's value has significantly increased over the past two years.
- The demand for gold-backed ETFs and physical gold remains strong.
New Delhi, Oct 6 (NationPress) Gold prices soared to an unprecedented high on Monday, surpassing the $3,900 per ounce threshold, as investors flocked to this safe-haven asset due to concerns over a possible extended US government shutdown and anticipated interest rate cuts by the Federal Reserve.
Spot gold appreciated by 0.4 percent to $3,900.40 per ounce in early Asian trading, reaching a peak of $3,919.59 at one point.
US gold futures for December delivery also experienced a rise of 0.5 percent, reaching $3,926.80. This surge in gold prices is attributed to increasing political instability within the US.
Additionally, there are growing expectations that the Federal Reserve will implement further interest rate cuts in the coming months.
Fed Governor Stephen Miran has recently advocated for a robust rate reduction strategy, cautioning about the potential economic repercussions of the current administration's policies.
Gold has already appreciated by 49 percent in 2025, following a 27 percent increase in 2024, according to official statistics.
This remarkable growth is driven by significant central bank purchases, a surge in demand for gold-backed exchange-traded funds (ETFs), a declining dollar, and increasing retail interest as investors seek refuge from global trade and geopolitical uncertainties.
In India, the demand for physical gold saw an uptick last week despite the soaring prices, as a major festival spurred purchases in the world’s second-largest gold market.
According to data from the India Bullion and Jewellers Association (IBJA), the price of 24-carat gold (10 grams) commenced the week at Rs 1,15,454 last Monday, escalating to an all-time high of Rs 1,17,332 during the week.
However, the gold price slightly receded from its peak on Friday, concluding the week at Rs 1,16,954 per 10 grams, yet remaining Rs 1,500 higher than the price recorded last Monday.
Meanwhile, the price of silver mirrored the trajectory of the yellow metal, closing the week at Rs 1,45,610 per kg, an increase of Rs 1,223 from Rs 1,44,387 last Monday.
Point of View
It is essential to recognize the implications of soaring gold prices. The current economic climate, characterized by uncertainty and potential rate cuts, highlights the importance of safe-haven assets. This situation not only impacts investors but also reflects broader economic trends that warrant close attention.
NationPress
06/10/2025
Frequently Asked Questions
What caused the recent spike in gold prices?
The spike in gold prices is primarily due to fears of a prolonged US government shutdown and expectations of further interest rate cuts by the Federal Reserve.
How has gold performed in recent years?
Gold has increased by 49 percent in 2025 and 27 percent in 2024, driven by strong demand and economic uncertainties.
