Gold hovers around $4,000 as shutdown fears, tariff doubts spur renewed investor demand

Gold prices edged higher on Thursday, supported by a weaker U.S. dollar and renewed safe-haven demand as investors weighed the impact of a possible prolonged government shutdown and fresh doubts over the legality of U.S. President Donald Trump’s tariff measures.

Spot gold rose 0.2% to $3,989.91 per ounce by 1:40 p.m. ET (1840 GMT), while US gold futures for December delivery settled almost unchanged at $3,991. The dollar retreated 0.5% after touching a four-month high in the previous session, making gold more affordable for foreign investors.

“With the U.S. government shutdown and skepticism from Supreme Court justices on the tariff case, we’re seeing a revival of the haven bid,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. “Gold is on track for a fairly decent close to the year. A year-end target in the $4,300–$4,400 per ounce range seems reasonable.”

India prices stay volatile

In India, gold prices have mirrored global fluctuations. After hitting an all-time high in early October at around Rs 132,770 per 10 grams (24K), prices have since corrected. As of November 7, 2025, 24-carat gold was priced at Rs 12,202 per gram, down Rs 55 from the previous day. The 22-carat variety stood at Rs 11,185 per gram (down Rs 50), while 18-carat gold traded at Rs 9,152 per gram (down Rs 41).

For larger quantities, the downward adjustment was sharper. A 100-gram bar of 24K gold fell by Rs 5,500 from yesterday’s rate, with similar drops observed across 22K and 18K segments. Despite the decline, analysts say persistent inflation fears and global uncertainty could keep gold supported in the near term.

Gold’s appeal as a store of value tends to grow during economic or political instability. The metal also benefits in lower interest rate environments, as it offers no yield of its own.

Fed policy remains in focus

The US Federal Reserve cut interest rates for the second time this year last week, and markets now see a 72% chance of another rate cut in December. However, Fed Bank of Cleveland President Beth Hammack cautioned that stubbornly high inflation argues against easing policy further.

Traders are closely watching the potential fallout from Trump’s trade policies and the ongoing government shutdown. “It would surprise us were gold to stay rangebound around $4,000 an ounce as speculative capital exits,” analysts at SP Angel wrote in a note. “Central bank buying remains the primary positive tailwind going forward.”

Spot silver rose 0.3% to $48.22 per ounce, while platinum dipped 1.8% to $1,533.93, and palladium slid 2.7% to $1,381.18.

Is gold in a bubble or just consolidating?

The broader question for investors remains whether gold is in a bubble or simply pausing before its next leg higher. Both gold and silver surged to record highs in early October before retreating after the Fed’s rate decision and a stronger dollar.

Comex gold briefly topped the $4,300 mark last month before closing October at $4,013.4, up 3.24% for the month. Comex silver gained 3% to settle at $48.25. On the MCX, gold closed 3.4% higher at Rs 1,21,284 per 10 grams, while silver rose 4.2% to Rs 1,48,399 per kilogram.

Former UK Treasury minister and ex-Goldman Sachs Asset Management chairman Jim O’Neill cautioned that gold’s recent surge showed “bubble-like” behavior, driven by retail investor enthusiasm and FOMO. However, he also acknowledged strong structural demand—particularly from central banks, including members of the BRICS group—seeking to diversify away from the US dollar.

Gold is traditionally viewed as a hedge against inflation. Although inflation remains stubbornly above the Federal Reserve’s 2% target, O’Neill pointed out that it has not accelerated. Bond yields have eased, and inflation expectations have improved—conditions that typically reduce the urgency to hold gold. For that reason, some analysts argue that the rally has outpaced the fundamentals.

At the same time, O’Neill acknowledges strong support for the bullish case. Central banks—especially those within the expanding BRICS group—are increasing gold holdings as they seek to reduce dependence on the U.S. dollar. This strategic diversification reinforces gold’s role as a global monetary asset.

Ultimately, O’Neill says gold’s future direction will depend on inflation trends and central-bank policy decisions. He remains open-minded, noting that nobody can confidently predict which scenario will dominate in the months ahead. “No one can confidently predict which side will dominate,” he said. “But one thing is clear—gold is back at the center of global market debate.”