On Wednesday, gold prices surged past the $4,000 mark for the first time ever, driven by a wave of investor demand for the precious metal as a safe haven amid expectations of US interest rate reductions and concerns surrounding a potential US government shutdown.
This sharp increase in gold’s value also reflects growing apprehension that the recent tech-driven rally, which has propelled some stock markets to unprecedented levels, may be overextended, sparking fears of an asset bubble.
Throughout 2025, gold has attracted significant investment, climbing over 50% since January. This rise has been fueled by a combination of factors including global economic instability, ongoing trade tensions initiated by former US President Donald Trump, and escalating geopolitical conflicts.
The metal’s appeal was further heightened this week due to political unrest in France, where the prime minister stepped down and former premier Édouard Philippe called on President Emmanuel Macron to resign and call for early elections.
Traditionally viewed as a reliable refuge during turbulent times, gold reached a peak of $4,039.86 on Wednesday, even as the US dollar strengthened against most other currencies. Silver prices also neared their own record highs.
The partial shutdown of the US government has intensified investor unease, delaying the release of crucial economic indicators such as employment data, which complicates the Federal Reserve‘s decision-making process regarding future interest rate adjustments.
“The swift ascent in gold prices has been bolstered by increased inflows into exchange-traded funds and central bank purchases, notably strong demand from China, as gold benefits from political, economic, and inflation-related uncertainties,” explained Taylor Nugent from National Australia Bank.
Chris Weston of Pepperstone added, “Institutional funds and global reserve managers are seeking protection against fiscal irresponsibility, currency depreciation, and erratic government policies – with gold positioned at the core of this defensive strategy.”
– AI Market Experiences a Reality Check –
While gold investors pushed prices to new heights, equity markets in Asia showed signs of hesitation amid growing scrutiny over the massive capital inflows into artificial intelligence sectors.
The AI surge has propelled certain indices and companies to record valuations, with semiconductor giant Nvidia surpassing a $4 trillion market cap.
However, a disappointing profit margin report from cloud software company Oracle rattled markets, causing all three major Wall Street indices to close lower.
Stephen Innes of SPI Asset Management remarked, “In a market expecting flawless performance, even a brief disruption in cash flow feels like the final call at a bar.”
He continued, “Investors didn’t wait for further details; they began reducing their holdings immediately. Oracle’s news didn’t end the rally but certainly brought a sobering pause.”
Technology stocks, which have enjoyed robust buying momentum this year, led the declines in Asia. Shares of Alibaba and JD.com fell in Hong Kong, TSMC dropped in Taipei, and Renesas declined sharply in Tokyo.
Hong Kong and Taipei were among the largest decliners, with Sydney and Singapore also experiencing losses.
Tokyo’s market retreated after an optimistic start fueled by the election of business-friendly conservative Sanae Takaichi as the ruling party leader, which had raised hopes for increased stimulus and renewed monetary easing.
Meanwhile, markets in Wellington, Manila, Bangkok, Mumbai, and Jakarta saw modest gains, alongside positive movements in London, Paris, and Frankfurt.
– Market Snapshot at Approximately 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.5% at 47,734.99 (close)
Hong Kong – Hang Seng Index: DOWN 0.5% at 26,829.46 (close)
London – FTSE 100: UP 0.3% at 9,511.20
Shanghai – Composite: Market closed for holiday
Euro/USD: DOWN to $1.1630 from $1.1652 on Tuesday
Pound/USD: DOWN to $1.3411 from $1.3422
USD/JPY: UP to 152.51 yen from 151.97 yen
Euro/Pound: DOWN to 86.70 pence from 86.83 pence
West Texas Intermediate Crude: UP 0.9% at $62.27 per barrel
Brent North Sea Crude: UP 0.8% at $65.96 per barrel
New York – Dow Jones Industrial Average: DOWN 0.2% at 46,602.98 (close)