The price of gold climbed to another record high Wednesday, a day after it topped the $4,000 level as a combination of factors helps extend the metal's impressive rally.
Gold on the NYMEX exchange traded around $4,067 an ounce at 11:55 a.m. ET. It traded above $4,000 an ounce for the first time Tuesday. It was the second major milestone for the precious metal this year, having reached $3,000 an ounce in March.
Gold prices are up more than 50% year to date and from the low on Jan. 6, making it the most successful asset class of 2025. On Tuesday, Comex gold for October delivery closed at $3,976.60 an ounce.
Several factors are driving the metal higher, including a weaker U.S. dollar, the Fed's resumption of rate cuts, inflation worries and, most recently, the U.S. government shutdown, which has frozen economic reports.
Louis Navellier, founder and chief investment officer of asset manager Navellier & Associates, says a lack of confidence in central banks combined with international turmoil is driving gold prices. He cited the U.S. shutdown, Japan (which is set to have its fifth prime minister since 2020) and France, which lost its new prime minister in just weeks.
Meanwhile, pressure on central banks to keep interest rates low increases upward pressure on inflation. Some world leaders are openly seeking lower rates to make sovereign debt easier to manage.
"The current economic data is simply overwhelming, with extremely weak jobs data combined with inflation that doesn't seem to be going away anytime soon," James Cordier, CEO of commodity trading firm Alternative Options, told IBD via email. "The Federal Reserve is now in a corner like never before, and it is difficult to imagine how they'll get out of it without lots of damage being done."
Why Gold Prices Keep Rising
The major world currencies don't look particularly healthy, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank. The U.S. dollar is under pressure from trade, political and debt worries. Sterling faces fiscal and political risks of its own, while French political turmoil hurts the euro. The Japanese yen, a traditional safe haven, has weakened on expectations that incoming prime minister Sanae Takaichi will mean a softer path for the Bank of Japan.
"As a result, assets without government ties — like gold and bitcoin — are seeing renewed inflows," she added. Bitcoin topped $126,000 on Monday and Wednesday morning traded around $122,550, up about 30% year to date. "These assets are likely to continue trending higher, not least thanks to a broadly softer U.S. dollar," Ozkardeskaya said in a report.
Thierry Wizman, Global FX & Rates Strategist at Macquarie Group, believes lingering inflation fears and the artificial intelligence trade also play a role, with gold acting as a hedge in case the AI boom fails to deliver on productivity and growth promises.
In addition, central banks continue to stock up on gold as a preferred alternative to Treasuries or the dollar, strategists say.
That shift began after the U.S. and Western allies froze Russia's foreign exchange reserves after the Ukraine invasion. The possibility of seizing those assets for the benefit of Ukraine has caused China and other countries to seek gold as a safer alternative. Today, the gold that world central banks have accumulated exceeds U.S. Treasury bond holdings, Macquarie said in a report Tuesday morning.
Gold Prices Drive Fund Flows
Global demand is, in turn, driving demand from individual investors. Gold ETFs saw record inflows in September, Morningstar analyst Brendan McCann said in a report Monday. Morningstar's commodities-focused category, which consists mainly of gold funds, had the third-largest inflows of any category last month — $10 billion. More than $9 billion of that went to funds that directly hold gold, such as SPDR Gold Shares.
Investors have piled $38 billion into the commodities-focused category so far this year, McCann added.
SPDR Gold Shares and iShares Gold Trust rose 1.6% to another record high Wednesday morning. Both ETFs broke out of flat bases Aug. 29 and are up about 17% from their buy points. VanEck Gold Miners ETF cleared a 54.70 buy point from a flat base in early August and is up 44% from that level. The ETF has rallied nine straight weeks since its breakout.
IBD's gold mining industry group, a top 10 group for many weeks, rose 1.8% Wednesday — the fifth-best group out of 197.
Gold Prices Topping?
Although there are no clear-cut topping signals among the gold ETF charts, there is also no sound entry for investors trying to buy shares right now.
Adam Turnquist, chief technical strategist for LPL Financial, said in a note Tuesday that gold's $4,000 level lines up near resistance from the upper end of a longer-term rising price channel. "Momentum in gold has been unrelenting," he added. "The ratio of up days to down days has been about 3-to-1 since the end of August, with no 1% or greater losses since Aug. 11."
