Gold surged to a new record high on Wednesday, triggered by the first U.S. government shutdown in nearly seven years after lawmakers failed to agree on a funding deal.
While market reactions to government shutdowns are often muted, this instance is creating significant uncertainty. The delay of a critical U.S. jobs report, due Friday, complicates the Federal Reserve’s outlook just weeks before its next policy meeting. Adding to the instability, President Donald Trump has threatened to use the shutdown to permanently cut federal jobs, a departure from the typical practice of furloughing and later reinstating employees.
With no clear resolution in sight, the duration of the shutdown remains unknown. During Trump’s first term, a similar impasse led to a 34-day partial shutdown, the longest in U.S. history.
The political turmoil prompted a sell-off in riskier assets, further fueling gold’s rally. The precious metal, a traditional safe-haven asset during economic and geopolitical turbulence, marked its 39th record high of the year.
By 5:02 a.m. ET, spot gold was trading at $3,893.06 per ounce. U.S. gold futures for December delivery also advanced, reaching $3,918.10.
### $4,000 Gold?
Michael Field, chief equity strategist at Morningstar, described the metal’s multi-year rise as “truly astounding.” He told CNBC that while the shutdown was the immediate catalyst for Wednesday’s surge, it was “just the straw that broke the camel’s back.”
Field cited a confluence of global risks—including two major conflicts, political instability in France, and new trade tariffs—as creating an “unstable picture for investors.” He added, “And when the going gets tough, gold gets a boost.”
Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, who previously forecast gold could reach $4,000, now believes it could climb even higher. “Gold is fast closing in on the $4,000 target that we put forward about a year and a half ago,” he said, noting a crucial shift in the market. While the initial rally was driven by central bank purchases, “since the beginning of the year, investors have come on board which has clearly accelerated the move.”
Gijsels argued that persistent global inflation and market volatility are prompting investors to diversify beyond traditional stock-and-bond portfolios and into “hard assets” like gold. “We are only in the second or third inning,” he said, using a baseball analogy. “$4,000 will not be the endpoint—just the start of the strongest bull market in precious metals the world has ever seen.”
UBS Strategist Joni Teves echoed the sentiment that gold remains under-owned by investors. “We expect gold’s bull run to continue over the coming quarters, driven by rising investor positions,” she wrote in a client note. “With the Fed easing cycle under way, dollar weakness and declining real rates should be bullish for the gold price.”
While UBS anticipates the rally will slow toward the end of 2026 as the Fed’s easing cycle concludes and economic conditions improve, Teves suggested a fundamental shift has occurred. “Given the structural shift in gold’s role to becoming a core part of strategic asset allocations, we expect the correction to ultimately be contained and for prices to stabilise at historically higher levels over the long run,” she added.
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