As uncertainty creeps into global markets, the gold price continues its seemingly inexorable rise. This morning (8 October), the price of gold set a new all-time high, clearing the $4,000 per troy ounce mark for the first time in history.
At the time of writing, gold’s latest all-time high stands at $4,049. This represents a 1.1% increase over the previous day’s close and gains of 54% since the end of 2024.
The gold price rally seemed to have stalled over the summer, but gold has returned to glimmering form during September, gaining 11.4% in the month to 7 October. That run has seen the gold price smash through successive all-time highs to break through the $4,000 barrier even sooner than many observers had expected.
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Investing in gold has been a favoured retreat of befuddled investors trying to make sense of the various market ups and downs that US president Donald Trump’s tariffs have provoked throughout the year so far.
“This latest high marks the latest stage in what has been a meteoric rise in the gold price, which has now doubled in the last two years,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.
The current gold rally is one of the best runs for the yellow metal in decades.
“As it stands, [gold] remains well on track for its strongest annual increase since 1979, when the oil shock that year led to a huge surge in inflation,” said Jim Reid, global head of macro research and thematic strategy at Deutsche Bank.
Which factors are pushing the gold price up?
Investors often flock to gold during periods of uncertainty as it is viewed as a reliable store of value during turbulent times.
“Gold, a traditional safe haven at times of political uncertainty, has soared to a new all-time high,” said Tom Stevenson, investment director at Fidelity International.
The most recent driver of higher gold prices is the US government shutdown, which entered into its second week on 6 October as gold prices first rose above $3,900.
“US government shutdowns come along as often as US politicians wish them to, so why has gold been so frothy about this one?” asked Clayton. “Some might point the finger towards France, where president Macron’s government is once more leaderless and unable to properly govern.”
The Federal Reserve (Fed) cut US interest rates at its meeting on 17 September. It is widely believed that pressure from Trump swayed the Fed’s decision; if so, it is likely to continue cutting rates for the foreseeable future.
Low interest rates, particularly in the US, are usually positive for gold prices. “The price of gold tends to rise as interest rates fall because the lower yields on rival assets like bonds make gold’s lack of income less of a disincentive to invest,” says Stevenson.
Looking back over the longer term, increased central bank gold purchases were the initial catalyst for the gold price rally.
"From a big picture standpoint, central bank buying of gold has increased over the last few years," says Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, "particularly following the start of the Russia-Ukraine conflict which saw a shift in reserve allocation away from the US Dollar and US Treasuries."
Globally, central bank net gold purchases have been higher than 1,000 tonnes in every year between 2022-2024 – more than double the average pace of the previous decade.
“That buying now accounts for 20% or so of annual physical demand, which has supported price rises despite the market’s daily liquidity remaining vast,” said Rebekah McMillan, associate portfolio manager at Neuberger. “The sustained purchasing has been driven primarily to diversify reserves, reduce reliance on the US dollar, and hedge geopolitical and financial risks,” she added.
“I wouldn’t put a specific price target on gold but it’s important to look at the broader context of the gold rally,” said Tom Bailey, head of research at HANetf. “The surge in gold prices since around 2022 is arguably less about short-term speculation and more about potential upending of the global monetary and macro landscape.”
Can gold prices keep climbing past $4,000?
The big question that gold investors will now have is whether gold can continue to climb, having passed the $4,000 threshold.
Further US rate cuts would be implicitly deflationary for the US dollar, in which gold prices are usually quoted. The US dollar index has fallen over 10% so far this year, further boosting the price of gold in dollar-quoted terms.
Expectations of future inflation could also cause an uplift in gold prices, since gold is often viewed as a hedge against inflation.
“US policy has turned inward and is unpredictable,” said Bailey. “The Trump administration has distanced itself from the traditional pillars of American economic leadership while presiding over perhaps the most serious challenge to the Federal Reserve’s independence in decades. So growing geopolitical uncertainty and growing doubts about the credibility of US economic governance have all combined to make gold more attractive.”
While acknowledging that forecasting future movements is difficult, Syms believes that the current setup for gold looks positive.
"Central banks are continuing to buy gold," he says, "and investor sentiment has become more positive, with investors appearing to buy dips rather than sell strength.
"Additionally, with rate cuts likely, US Treasury yields and the dollar could fall, both of which tend to be supportive for gold."
“Since 2001, gold has never declined in a scenario where US CPI is above 2% and the Fed is easing monetary policy,” said Michael Widmer, commodity strategist at Bank of America.
While it seemed a long way off at the start of the year, when gold was trading at a little over $2,600, it now looks likely that the gold price could continue to rise beyond $4,000 in the near future.
How to gain exposure to gold prices
There are three main ways to invest in gold. The first one is investing in the metal itself through a financial contract, such as an exchange-traded fund (ETF) or exchange-traded commodity (ETC).
Investments into these kinds of products are another factor helping to support gold prices this year.
“European investors are getting involved, having added over $6.5 billion to gold ETCs this year alone, reversing the outflows of 2024,” says Bailey.
See our article on the best gold ETFs for more information.
You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust.
While gold miners don’t always rise with the gold price, as other company-specific factors are at play, they have “stolen the show so far” this year, says Bailey.
“Whereas physical gold outperformed miners by a wide margin in 2024, this year gold miners have produced a return almost three times higher,” Bailey adds. “The sustained bull market in physical gold, it would appear, is finally starting to feed through to performance for miners.”
Lastly, you can buy physical gold bars or gold coins.
In terms of how much gold to hold in a portfolio, Stevenson suggests around 5-10% is a good amount – which is about the same as you might hold in cash.
“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he comments.
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