Gold crosses $3,900/oz for first time on safe-haven demand

Gold has jumped 49% so far this year after a 27% rise in 2024

Gold surged past the $3,900-an-ounce level for the first time on Monday, driven by safe-haven demand following a decline in the yen, the U.S. government shutdown and the growing expectations of additional Federal Reserve rate cuts.

Spot gold was up 1.1% at $3,929.91 per ounce by 0208 GMT.

Yen weakness on the back of the Japanese LDP elections has left investors with one less safe-haven asset to go to, and gold was able to capitalise, said KCM Trade Chief Market Analyst Tim Waterer.

The yen dropped against the U.S. dollar by the most in five months after fiscal dove Sanae Takaichi was elected to lead the ruling party and become the next prime minister.

The enduring U.S. government shutdown means that a cloud of uncertainty still hangs over the U.S. economy, and the potential size of any GDP impact, he added.

Gold is a go-to asset for investors under these circumstances, particularly with the Fed expected to cut rates further this month, Waterer said.

The Trump administration will start mass layoffs of federal workers if U.S. President Donald Trump decides negotiations with congressional Democrats to end a partial government shutdown are “absolutely going nowhere,” a senior White House official said on Sunday.

U.S. central bank Governor Stephen Miran pressed for an aggressive rate cut trajectory again on Friday, citing the impact of Trump administration’s economic policies.

Gold has jumped 49% so far this year after a 27% rise in 2024, helped by strong central bank buying, higher demand for gold-backed exchange-traded funds, a weaker dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.