【Epoch Times, October 12, 2025】The price of gold has recently surpassed the historic high of $4000 per ounce, shining brightly for investors. However, analysts warn that the ongoing surge in gold prices also reflects increasing concerns about the stability of the U.S. and global economies, as well as geopolitical tensions.
From the situation in the Middle East to the Russia-Ukraine conflict, global geopolitical risks continue to escalate, fueling a rise in risk aversion. Meanwhile, the policy tug-of-war among major global economies regarding inflation, interest rates, and growth remains unresolved. With the U.S. federal government shut down, market expectations for Fed rate cuts have fluctuated multiple times, leading to an unusual scenario where gold prices are rising faster than the stock market.
Just this year alone, gold prices have surged by 53%, far exceeding the 15% gain of the S&P 500 index during the same period. Since gold first broke through the $4000 mark on October 7, data from financial data company FactSet shows that on October 8, gold prices slightly rose to touch $4078 per ounce.
Yet, despite the recent surge in stock prices to historic highs and accelerated economic growth in recent months with relatively low inflation, questions have arisen about what is reigniting interest in gold among investors.
According to a report by CBS News, Brett Kenwell, an investment analyst at eToro USA, expressed in an email, “At the beginning of the year, $4000 per ounce seemed out of reach as gold was hovering near $2800 per ounce in 2025. But after experiencing a rebound of about 50%, we finally reach the milestone of gold surpassing $4000.”
There are numerous factors supporting the rise in gold prices, including the strong demand for gold bars by central banks following the freezing of Russian assets after the outbreak of the Ukraine conflict in 2022, relatively moderate growth in newly mined gold production, and a surge in retail investor activity driving more funds into gold ETFs.
Researchers at Barclays Bank noted in a report that the recent surge in gold prices surpassing $4000 per ounce is somewhat unusual because historically, such increases usually occur during stock market downturns, rapid reductions in lending costs by central banks, and periods of economic instability.
They wrote, “What’s particularly impressive about the current rise in gold prices is that, despite a healthy financial market, relatively high federal fund rates, and no widespread signs of economic distress, gold prices are rising.”
Nigel Green, CEO of investment firm deVere Group, stated, “When investors are concerned about the economy, gold is typically their safe haven. The ongoing U.S. government shutdown only exacerbates their anxiety.”
Green told CBS in an email, “The situation in Washington reminds investors that political promises do not equate to financial security. Gold represents protection against this uncertainty, but its price also reflects the extent of people’s loss of confidence in other assets. This level of dependency always comes with risks.”
Despite the continued economic expansion, economists express concerns about potential roadblocks to economic growth, such as the impact of U.S. tariffs and a sluggish job market.
As the government shutdown enters its second week, federal agencies have yet to release economic data. Kevin Ford, a foreign exchange and macro strategy analyst at Convera, stated in the CBS report that this makes it more challenging to grasp the economic condition.
“Ongoing government shutdown makes it difficult to decipher the U.S. economy, severely reducing economic predictability,” Ford pointed out.
Meanwhile, Paolo Pasquariello, a finance professor at the University of Michigan, told ABC News that the high gold prices serve as an early indicator of future challenges for the U.S. economy.
Aside from economic turmoil, the surge in gold prices is also driven by other factors. Investors widely anticipate that the Fed will cut rates later this month to offset the impact of a slowdown in the labor market, marking the Fed’s consecutive rate cuts. In September this year, the Fed lowered its benchmark rate for the first time since the end of 2024.
According to CBS, Bart Melek, head of commodity strategy at TD Securities, stated in a report that part of the reason for the rise in gold prices is investors’ expectations that the Fed is entering a period of loose monetary policy.
He informed investors in a report that as rates seem to be declining, gold becomes more attractive as a financial asset because investors will not miss out on the high yields of U.S. treasuries and other government bonds.
Melek wrote, “Gold may be a better safe-haven asset than U.S. treasuries.”
Gold investment is also being driven by other factors. Analysts point out that amid escalating geopolitical tensions (such as ongoing wars in Gaza and Ukraine), there is strong demand for gold from central banks worldwide.
Green from deVere stated that central banks of other countries are the “silent forces behind the surge in gold prices.” He added, “They purchase nearly 1000 tons of gold each year to reduce exposure to the dollar and strengthen their financial resilience. When official institutions continue to accumulate gold at this pace, they provide a solid foundation for the market, but there are limitations even with this.”
Despite the impressive performance of gold prices this year, the metal itself exhibits volatility, especially when buyers enter the market at high points, risking losses rather than seeking security.
Jim Wyckoff, senior market analyst at Kitco Metals, told ABC News, “Gold and silver are currently in a prosperity cycle, but what can be certain is that they will enter a recession period earlier than investors expect.”
However, Wyckoff noted that a series of economic and political uncertainties have prompted investors to seek safe havens. He added, “This trend is spreading to the demand for gold as a safe haven.”
Experts urge ordinary investors not to bet everything on gold. Critics argue that gold is not always the inflation hedge tool many claim it to be, and there are more effective ways to guard against potential capital losses, such as derivative investments.
Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, stated in an email on October 7, “Many market participants view gold as a safe-haven asset. However, investors need to be aware that the volatility of gold can reach 10%-15%.”
He also added that the buying and selling spread for small quantities of physical gold, such as gold coins or 1-gram gold bars, is significant.