Onome Amuge
Gold soared to a fresh all-time high on Tuesday as investors sought shelter in safe-haven assets, unnerved by political turbulence in Washington, uncertainty over tariffs and renewed strains in European public finances.
The precious metal climbed to $3,501.59 an ounce, breaking its April peak of $3,500.10. Analysts said the rally reflected intensifying unease about the independence of the US Federal Reserve, alongside concerns that a wave of legal and political challenges could further destabilise the global economy.
The move came against a backdrop of heavy selling across global equity markets. Wall Street’s main indices opened sharply lower as investors returned from the Labor Day holiday, while European bourses ended the session in the red. Frankfurt’s DAX closed down 2.3 per cent, although it remains 18 per cent higher year-to-date, and London’s FTSE 100 fell 0.9 per cent.
“September can be a strange month for financial markets, as stocks historically tend to underperform. But this is more than seasonal weakness. A sell-off in bonds, a rally in the dollar, and a dash into gold point to a flight into safe and liquid assets,” said Kathleen Brooks, research director at XTB.
Market jitters intensified as investors weighed the implications of President Donald Trump’s escalating battle with the Federal Reserve. A court on Tuesday heard the challenge by Fed governor Lisa Cook to Trump’s attempt to oust her from office, a case analysts say carries significant consequences for the central bank’s autonomy.
The uncertainty added to anxieties around Trump’s tariff campaign. A US court ruled on Friday that many of the president’s duties were imposed without proper authority, raising doubts about their future. While the tariffs will remain in place until at least mid-October pending appeal, analysts warned the ruling injected fresh instability into trade policy.
The sell-off in equities was mirrored in government debt markets, where yields spiked on both sides of the Atlantic. The yield on 30-year US Treasuries rose close to 5 per cent, marking the highest level in years. Rising borrowing costs also hit Europe, with yields in France and the UK touching multi-year highs.
France’s 30-year bonds climbed above 4.5 per cent, their highest since the eurozone debt crisis in 2011, as political uncertainty deepened ahead of a confidence vote next week. Prime minister François Bayrou called the vote in an attempt to settle a budget dispute but is widely tipped to lose, raising the prospect of further instability in Paris.
In Britain, the yield on 30-year gilts reached levels last seen in 1998, as investors fretted over sluggish growth and mounting fiscal challenges.
The US dollar strengthened against the euro and sterling, adding to headwinds for European equities and underlining the appeal of US assets despite political turbulence in Washington. Analysts said the greenback’s rally reflected investors’ preference for liquidity in periods of heightened volatility.
Gold’s record run highlights the extent to which investors are hedging against a deteriorating outlook. Alongside the Fed dispute and trade policy uncertainty, analysts pointed to longer-term worries about the resilience of developed economies facing high debt loads and anaemic growth.
“Gold has always been the ultimate insurance policy. Right now, with equity markets wobbling, bond yields climbing and politics looking fragile on both sides of the Atlantic, that policy looks cheap,” said Brooks at XTB.
