Onome Amuge
Gold extended its blistering rally to a seventh consecutive week, rising to an all-time high in international markets as investors flocked to safe-haven assets following the US government shutdown.
Spot gold climbed to $3,896.91 per ounce on Friday, underscoring the metal’s global appeal as uncertainty surrounding the US economy and expectations of a Federal Reserve rate cut spurred demand.
“The latest catalyst behind this steep rise has been the US government shutdown, triggered after a Republican-backed spending bill failed to clear the Senate. Concerns about the fallout from a prolonged shutdown, along with delays in key economic data releases, injected fresh safe-haven demand into gold,” said Sugandha Sachdeva, founder of SS WealthStreet.
The rally has been driven by a combination of factors: weakness in the US dollar, a softer labour market, and speculation the Fed could cut rates as early as its October meeting. ADP private-sector employment data showed a loss of 32,000 jobs in September, heightening expectations of a 25-basis-point reduction.
Global investment appetite has strengthened, with the SPDR Gold Trust adding $4 billion in assets under management in the past two weeks, equivalent to 3 per cent of its overall AUM. Central banks also added a net 15 tonnes of gold in August, reversing July’s stagnation and reaffirming long-term confidence in the asset.
Ross Maxwell, global strategy lead at VT Markets, said: “Technically, gold is in overbought territory, but any corrections are more likely to be profit-taking rather than a fundamental shift. The $4,000 level may act as a psychological barrier, but the long-term trend remains positive.”
Despite the rally, analysts cautioned that near-term volatility was possible. Yet with geopolitical tensions between Russia and Ukraine persisting, central bank accumulation ongoing, and ETF inflows rising, the structural case for gold remained robust.
