Gold tops $4K for first time as investors flee inflation, global turmoil

Gold prices hit $4,000 an ounce for the first time Tuesday as investors piled into the precious metal at a time of stubborn inflation, a lingering government shutdown and deepening geopolitical risks.

Gold futures briefly touched $4,005.80 before settling just below the milestone on Tuesday morning.

Prices have soared more than 50% this year, fueled by fears of a prolonged funding crisis in Washington and President Donald Trump’s escalating trade clashes with China and the European Union.

The surge cements gold’s status as 2025’s best-performing major asset, outpacing US stocks and cryptocurrencies as central banks, sovereign funds and retail buyers rush to shield their portfolios from market shocks.

Demand has swelled from both sides of the trade.

Governments led by China and Russia have been boosting reserves to reduce exposure to US sanctions, while consumers buy coins and bars to blunt the hit from rising prices at home.

Spot gold at one point was trading up 0.6% at $4,002.10 an ounce.

Silver jumped 1.3% to $48.22, while the dollar index slipped 0.4% against a basket of major currencies.

Bridgewater Associates founder Ray Dalio said the environment reminds him of the inflation-scarred 1970s and advised investors to hold more gold than usual.

“Gold is a very excellent diversifier in the portfolio,” Dalio said Tuesday at the Greenwich Economic Forum in Connecticut.

“If you look at it just from a strategic asset allocation perspective, you would probably have something like 15% of your portfolio in gold … because it is one asset that does very well when the typical parts of the portfolio go down.”

Dalio likened today’s fiscal and monetary pressures — marked by record borrowing and heavy spending — to the early-’70s mix of high inflation and eroding confidence in paper assets.

He said investors are again turning to hard stores of value as protection from debt-driven currency depreciation.

He has long argued that gold serves as a hedge against both inflation and political uncertainty because, unlike bonds or cash, it carries no counterparty risk or reliance on repayment.

Citadel founder Ken Griffin said the recent flight to gold reflects deeper concern about the US dollar’s long-term stability.

“We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk,” Griffin told Bloomberg News on Monday.

He called the trend “really concerning” and warned that extraordinary fiscal stimulus and rate cuts are inflating asset prices.

“We’re definitely on a bit of a sugar high in the US economy right now,” Griffin said.

Griffin’s remarks came as the federal shutdown entered its third week and investors braced for fresh comments from Federal Reserve Chair Jerome Powell on Thursday.

Markets expect the Fed to trim rates again before year’s end after its first cut in nine months last month.

Bank of America urged caution Monday as the metal’s rally accelerated toward the psychological threshold. In a note to clients, the firm said gold faces “uptrend exhaustion,” which could lead to “a consolidation or correction” in the fourth quarter.

The warning followed months of inflows into gold-backed ETFs and record central bank purchases — trends that analysts say have created a feedback loop driving prices even higher.

Gold’s rise has coincided with mounting investor anxiety over US fiscal policy and global trade tensions.

Trump has vowed to rewrite existing trade agreements and slap new tariffs on key partners, raising the specter of retaliatory measures that could slow growth and weaken the dollar.

At the same time, repeated clashes between the White House and the Federal Reserve have stoked concern over the central bank’s independence.

Traders are now betting heavily on multiple rate cuts this year as inflation lingers and government spending continues to surge.

Gold has gained ground even as US equities hover near record highs. The S&P 500 is up about 14% this year, supported by robust corporate earnings and hopes that rate cuts will extend the economic expansion.

Yet many traders say the parallel rally in gold signals deep unease about what’s ahead.

The so-called “debasement trade” — favoring gold, silver and Bitcoin — has dominated markets this year as investors hedge against the risk that Washington’s fiscal and monetary largesse could erode the dollar’s value.

Gold’s inflation-adjusted price also climbed to its highest level since 1980 earlier this month, highlighting its renewed appeal as a store of value during political and economic upheaval.

Globally, central banks have continued to amass bullion at a record pace.

Data from the World Gold Council show more than 70% of monetary authorities plan to raise gold holdings this year, with China, India and Turkey leading the charge.