Shutdown, Fed policy, and weak USD push gold to record high

Spot gold shattered the USD 4k an ounce barrier the first time on Wednesday, hitting a record of USD 4,059 as the US government shutdown pushed its rally to a peak. The precious metal is up more than 50% this year, and 20% since July with its returns now outperforming equities since the start of the century, Bloomberg reported yesterday.

The current US government shutdown is seen as the immediate catalyst, compounding market anxiety from tariffs and geopolitical risks, UBS Global Wealth Management’s commodity analyst Giovanni Staunovo told The Associated Press. The metal’s appeal is also fueled by Federal Reserve interest rate cuts, a weakening USD, and strong, long-term purchasing from central banks worldwide. The US and Western allies’ move in 2022 to freeze about USD 300 bn in Russian foreign assets was the “trigger point” for the gold rally, Staunovo added.

The metal’s rise also reflects growing concerns over government debt, geopolitical risks, and declining confidence in national currencies, Bridgewater Associates founder Ray Dalio told Bloomberg.

Gold-backed ETFs saw their largest inflows in over three years in September, signaling a shift away from overvalued equities toward diversification, Saxo strategist Charu Chanana told Bloomberg. “Gold breaking USD 4k isn’t just about fear — it’s about reallocation,” she said, noting that easing real yields and stretched AI-heavy stocks are fueling renewed investor interest. Dalio echoed this sentiment, describing gold as “a very excellent diversifier” and advising that an optimal portfolio should include around 15%.

Forecasts remain bullish, with strategists at Goldman Sachs raising their 2026 price target to USD 4.9k an ounce from USD 4.5k, citing a “structural shift in reserve management behavior.” Dalio declared gold as “certainly” more of a safe haven than the USD, comparing its recent record-setting rally to the 1970s, when the metal surged amid high inflation and economic instability.

While gold is widely viewed as a hedge against inflation, some analysts urge caution. Staunovo noted that despite its safe-haven reputation, gold remains highly volatile, with price swings of 10-15%. The Commodity Futures Trading Commission also warned that during periods of economic uncertainty, sellers tend to benefit more than buyers.

MARKETS THIS MORNING-

Japan’s Nikkei is leading the gains this morning among Asian markets, inching up 1.3% in early trading after SoftBank’s stock soared on sealing the agreement to buy ABB robotics for USD 5.4 bn. The Shanghai Composite is also inching up 0.6%, while Hong Kong’s Hang Seng is going in the other direction, down 0.3%. Meanwhile, Wall Street futures are unchanged after S&P 500 logged another all-time high yesterday.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.2% yesterday on turnover of SAR 7.6 bn. The index is down 4.0% YTD.

In the green: SPM (+3.0%), Naqi (+2.7%) and Albabtain (+2.5%).

In the red: Chubb (-3.9%), SPPC (-3.7%) and Emaar EC (-3.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.7% yesterday on turnover of SAR 50.2 mn. The index is down 18.4% YTD.

In the green: Knowledgenet (+11.4%), Dar Almarkabah (+9.7%) and Alrasheed (+9.7%).

In the red: Leaf (-7.7%), Shalfa (-6.4%) and Alashghal Almoysra (-4.9%).

CORPORATE ACTIONS-

Al Moammar information Systems Company’s board greenlit a SAR 24 mn dividend payout for 3Q 2025 at SAR 0.80 apiece, it said in a disclosure to Tadawul yesterday. The distribution date is set for 25 November.

ALSO- Al Moammar’s board approved a SAR 24 mn dividend payout for 2Q 2025 at SAR 0.80 per share, it said in a separate disclosure. The distribution date is set for Sunday, 26 October.