Gold surpassed the $4,000 threshold on Wednesday, October 8th, an unprecedented event. It is benefiting from its role as a safe-haven asset amid numerous political, geopolitical, and budgetary uncertainties. Meanwhile, US stocks, already at record highs, climbed again, driven by the technology sector.
On Wednesday morning, gold was trading at $4,036.42 per ounce (+1.29%). In comparison, an ounce of gold was worth less than $2,000 just two years ago.
This recent surge “is occurring in the context of falling Treasury bond yields,” other traditional safe-haven assets, “and budgetary paralysis” in the United States, “but the price of gold has been rising throughout the year,” experts explain. This gold rally is reminiscent of “1979, the year when the oil shock led to a sharp increase in inflation.”
Amid global economic uncertainty and a lack of investor confidence in US assets, the price of the yellow metal has climbed by more than 50% since the start of the year.
As a safe-haven asset, the US dollar was up 0.27% against the euro on Wednesday, at $1.1625 per euro, and gained 0.05% against the British pound, at $1.3420.
Dollar’s Rise Accelerated by Selling of Euro and Yen
The dollar’s rise accelerated as investors sold the euro and the yen. The trend with the yen is fueled by political developments in Japan, which suggest fewer anticipated rate hikes from the Bank of Japan.
“The French political situation is affecting the euro, accompanied by disappointing German industrial production figures” on Wednesday.
Important negotiations are continuing in France to try to reach a budget agreement by the end of the year, which could reduce the likelihood of a dissolution of the National Assembly.