Gold Prices Breaking Records: How the $4,000 Threshold Was Surpassed?

Historic Peak in Gold Prices

Gold prices have surpassed a historic level of $4,000 per ounce due to the possibility of a U.S. government shutdown and economic uncertainties. This marks a significant turning point for the precious metal, which was only trading at around $2,000 two years ago.

Reasons for the Rise

This year, gold has seen an increase of over 50%, outpacing stock market returns. Factors such as global trade, tariff uncertainties, the Fed's independence, and the financial situation of the U.S. have played important roles in this rise. The increase in geopolitical tensions has also boosted demand for gold, which investors see as a safe haven.

The Role of Central Banks

Charu Chanana, a strategist at Saxo Capital Markets Pte, noted, “Gold surpassing $4,000 is driven by not only fear but also a reallocation of assets in portfolios. Economic data is at a stagnation phase, and as interest rate cuts are still very near, real returns are declining. The expensive nature of AI-heavy stocks is redirecting investors in search of alternatives.”

Important Statements from Ray Dalio

Highlighting the importance of gold as a safe investment vehicle, Ray Dalio, founder of Bridgewater Associates and billionaire investor, stated, “Gold has definitely become a safer haven than the dollar.” Dalio emphasized that gold is a critical element in portfolio diversification, asserting, “Allocating about 15% of your portfolio to gold would be the most appropriate distribution.”

Geopolitical Risks and Economic Instability

Dalio pointed out that the increasing debt burden and geopolitical tensions are enhancing gold's significance as a store of value. Furthermore, he expressed concerns regarding the rapid increases in stock valuations and the AI bubble, stating, “This situation feels like a bubble to me.”