Gold prices have surged to unprecedented levels, breaking the $4,000 US per troy ounce mark for the first time as jittery investors flock to the metal amid a prolonged U.S. government shutdown and deepening global trade tensions.
Gold futures climbed to $4,013 per troy ounce on Tuesday morning, up nearly 50 per cent since the start of 2025, while New York spot gold closed at $3,960.60 on Monday. Silver prices have soared even higher in percentage terms, up roughly 60 per cent year-to-date to around $48 per troy ounce.
The rally comes as President Donald Trump’s trade wars continue to shake the global economy. A wave of tariffs imposed since January has pushed up costs for businesses and consumers, strained supply chains, and contributed to a sharp slowdown in hiring. Inflation has ticked upward, and many investors are turning to gold as a hedge against economic uncertainty and rising prices.
The U.S. government shutdown, now stretching on with no resolution in sight, has amplified anxieties. Key economic data releases have been delayed, and federal employees are facing extended furloughs and unpaid work. Trump has threatened to use the shutdown to carry out mass firings and potentially shutter offices permanently, adding another layer of instability.
Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, noted that the rally has been fueled by multiple forces — including a weakening U.S. dollar and recent interest rate cuts by the Federal Reserve. The Fed lowered its key rate by a quarter point last month and signaled two additional cuts later this year, making gold more attractive compared to interest-bearing investments.
Geopolitical tensions, including ongoing conflicts in Gaza and Ukraine, and strong demand from central banks have further boosted gold’s appeal. Staunovo traced the beginning of this sustained rally back to 2022, when Western allies froze $300 billion of Russian foreign holdings at the onset of the Ukraine war.
“Gold is perceived by many market participants as a safe haven asset,” Staunovo said, though he cautioned that it still carries a volatility of 10 to 15 per cent and that smaller physical gold pieces can have wide buy-sell price spreads.
The surge reflects a broader flight to safety by investors seeking stability amid economic turbulence — a trend so strong that even retailers like Costco have capitalized by selling gold bars to consumers in recent years.