Gold hits an unprecedented $4,000 per ounce for the first time—here’s why investors are panicking | AP News
NEW YORK (AP) — History was made Tuesday as gold futures surged beyond $4,000 per troy ounce, marking a record high amid growing economic uncertainty. With the U.S. government shutdown dragging on, investors are scrambling for safe havens for their cash. Just yesterday, spot gold closed at $3,960.60, but today’s surge signals a historic shift in market sentiment.
This isn’t just a blip. Gold prices have soared 50% since January 2025, hitting $4,003 by 4 p.m. ET Tuesday—a stark contrast to the $2,670 starting point. Silver is even more explosive, jumping nearly 60% to nearly $48 per ounce. But here’s where it gets controversial: Is this a smart investment or a panic-driven bubble?
The driving force? Uncertainty. Investors historically flock to gold during turbulence, and 2025 has delivered plenty. President Trump’s aggressive tariffs—now in their third year—have sparked a perfect storm. Higher production costs, weaker hiring, and creeping inflation (up 3.2% in September) have left consumers gloomy. The ongoing government shutdown has only worsened the mood, with federal workers furloughed and key economic data frozen. And let’s not forget Trump’s threat to use the shutdown to fire employees—a move critics call a political weaponization of public service.
But wait—there’s more to this story. The Federal Reserve’s rate cuts have also played a role. Last month’s 0.25% cut—and hints of two more this year—have made gold more attractive than bonds. Meanwhile, the U.S. dollar’s decline has further fueled demand, as Giovanni Staunovo of UBS explains: 'Gold’s rally began in 2022, but the Ukraine war’s sanctions on Russia’s $300 billion reserves were the spark.'
Now here’s where jewelry shoppers feel the pain. Retailers like Pandora warn of 'sticker shock' as material costs and tariffs push prices higher. Alexander Lacik of Pandora admits, 'We’re bracing for category-wide price hikes.' But some are cashing in: Dealers report families melting heirlooms to capitalize on record prices.
Yet experts urge caution. While gold is a classic 'safe haven,' its 10-15% volatility means it’s no sure bet. 'Smaller physical holdings like coins have steep buy/sell spreads,' Staunovo cautions. The Commodity Futures Trading Commission adds a stark warning: When panic buying spikes, sellers—not buyers—often walk away with the biggest profits. And this is the part most people miss: Gold’s environmental toll. Mercury use in illegal mining has surged, poisoning waterways and communities in Peru, Mexico, and beyond. Even small-scale exposure risks brain damage and birth defects.
So is gold worth the gamble? Proponents argue it’s a critical portfolio hedge against inflation. Skeptics counter that derivatives offer safer diversification. We want to hear from you: Does gold deserve its 'haven' status, or is it a risky relic in today’s markets? Sound off below—and stay tuned for updates as this story evolves.
