This ascent is driven by a combination of geopolitical tensions, uncertain US economic outlook, and expectations of further Federal Reserve interest rate cuts.

The ongoing US government shutdown, now entering its second week, has intensified safe-haven flows into gold. Investors are concerned about the economic impact of the shutdown, potential layoffs, and a murky labour market, which together heighten the demand for assets perceived as secure stores of value. Political gridlock in Washington and threats to the Fed’s independence have further dampened confidence in traditional financial markets and the US dollar, amplifying gold’s appeal.

Major banks have raised their gold price forecasts amid these dynamics. HSBC predicts that gold could trade above $4,000 per ounce in the near term, citing geopolitical risks, fiscal uncertainties, and a sustained appetite for gold as a portfolio diversifier. Goldman Sachs and JP Morgan share similarly bullish outlooks, expecting gold to reach $4,000 by mid-2026.

A new analysis released by Goldman Sachs outlines scenarios in which gold could climb to almost $5,000 (c. £3,720) per ounce, saying “if 1% of the privately owned U.S. treasury market were to flow into gold, the gold price would rise to nearly $5,000”.

Currently, central bank demand for gold remains robust, with emerging economies particularly active in increasing their reserves to diversify away from the US dollar. This trend is compounded by a broader move towards ‘dedollarisation’ as nations seek alternatives to dollar-denominated assets.