Spot gold prices rose to as high as $4,021.53 per ounce, and U.S. gold futures, which already topped $4,000 earlier this week, were trading at $4,041.20 per ounce.
Gold prices surged past the $4,000 mark for the first time in early trading on Wednesday, aided by growing political uncertainties in the U.S. amid strong inflows into exchange-traded funds.
Spot gold prices rose to as high as $4,021.53 per ounce, and U.S. gold futures, which already topped $4,000 earlier this week, were trading at $4,041.20 per ounce at the time of writing. Retail sentiment on Stocktwits about SPDR Gold Shares ETF (GLD) was in the ‘bullish’ territory at the time of writing.
“Love coming here to see gold bears panic every single day this year,” one Stocktwits user said.
“Retail is still totally consumed with the AI bubble and hasn’t even discovered gold yet,” another user wrote.
U.S. Impasse & FOMO Fuel Rally
Gold prices have surged due to a shutdown of the U.S. government, which entered its second week on Wednesday. As the Democratic and Republican lawmakers remain locked in a dispute over healthcare benefits, investor confidence in the world’s largest economy continues to dip, leading to safe-haven flows into bullion.
“The latest leg higher has been underpinned by the growing uncertainty over the U.S. government shutdown and fear-of-missing-out flows into physical gold ETFs,” Adam Turnquist, Chief Technical Strategist for LPL Financial, said.
According to World Gold Council data, physically backed gold ETFs recorded their largest monthly inflow in September, resulting in the strongest quarter on record, with $26 billion in inflows. Notably, North American funds alone netted $10.6 billion in inflows in September.
Wednesday’s advances came despite the U.S. dollar gaining against major peers. The rise of the greenback is typically considered a negative for bullion, as it makes the precious metal more expensive for overseas buyers.
Pullback Risks?
LPL analysts noted that gold is now trading at a premium of over 20% to its 200-day moving average, marking nearly two standard deviations above its average. However, the firm cautioned that despite its bullish stance on precious metals, it recommends adding exposure on weakness given the degree of overbought conditions.
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