gold price: Gold price rate to rise more or fall back? Here’s what is driving spike, all about debasement trade, China’s gold buying, AI bubble concerns, macroeconomic factors

Gold price rate to rise more or fall back? Investors are closely watching gold markets as prices hit record highs. Factors such as U.S. government debt, China’s gold buying, AI market concerns, and the ongoing U.S. shutdown are driving uncertainty. Traders are using gold as a safe-haven asset amid these risks.

Gold price rate to rise more or fall back?

Gold broke a new record on Tuesday, reaching over $4,000 per troy ounce. On Wednesday morning, it was $4,055.30 on Comex’s continuous contract index. Gold is up more than 50% for the year.
At first glance, the rally seems unusual. Gold is a safe-haven asset, used when markets or the economy are weak. But U.S. GDP growth is strong, unemployment is low, and the S&P 500 continues to reach record highs.
So why is gold rising?

Gold price rise factors

Debasement trade

Government debt in the U.S., U.K., Europe, and Japan is at historic levels. Some investors avoid bonds and invest in gold instead. This trend is called the “debasement trade.”

US government shutdown

The ongoing U.S. government shutdown adds uncertainty. Investors use gold to protect their money from dollar-based risks.

China’s gold buying

China is diversifying its foreign reserves away from the U.S. dollar. The dollar has weakened by 9% this year. The People’s Bank of China bought gold for the 11th consecutive month in September.

AI bubble concerns

Some investors worry about an AI-driven stock rally failing to meet growth expectations. Gold acts as a hedge against these risks.

Macroeconomic factors

Other factors supporting gold include a weaker dollar, the potential for interest rate cuts, U.S. deficit concerns, inflation fears from tariffs, and foreign central bank purchases.

Gold price rate rise investor uncertainty and market outlook

The U.S. government shutdown continues to create uncertainty. Key sources of macroeconomic data are offline. Gregory Daco, chief economist at EY-Parthenon, says the shutdown could reduce GDP growth by about 0.1 percentage points weekly. Business and consumer confidence is also affected.

Even so, stocks may not fall immediately. Back-to-back interest rate cuts from the Federal Reserve could support stock prices.

Market snapshots ahead of the opening bell:

• S&P 500 futures: up 0.14%
• STOXX Europe 600: up 0.55%
• FTSE 100: up 0.55%
• Nikkei 225: down 0.45%
• CSI 300: up 0.45%
• KOSPI: up 2.7%
• Nifty 50: down 0.13%
• Bitcoin: $122.6K

FAQs

Will gold prices continue to rise in 2025?

Gold may rise as long as the U.S. shutdown continues, dollar weakness persists, and investors seek a hedge against debt and AI market risks.

How does China influence gold prices?

China’s consistent gold buying diversifies reserves from the dollar. This increases global demand, supporting gold price growth despite record highs.