Hong Kong - Gold prices broke $4,000 for the first time on Wednesday as investors piled into the haven over expectations for US interest rate cuts and worries over the US government shutdown.
The rally in the precious metal also came after concerns that a tech-fuelled rally that has sent some equity markets to record highs may have gone too far, fanning talk of an asset bubble.
Traders have been piling into gold all year, pushing it up more than 50 percent since the turn of the year, on the back of a range of issues, including global economic uncertainty, Donald Trump's trade war, and geopolitical crises.
Its allure was increased further this week by political turmoil in France, where the country's prime minister resigned and President Emmanuel Macron's former premier urged him to resign and call early elections.
Gold -- long considered a go-to in times of uncertainty -- climbed to a high of $4,006.68 on Wednesday, even as the dollar has pushed up against most of its peers in recent days. Silver was also within a few dollars of its own record high.
The closure of parts of the US government is adding to the sense of unease among investors, with key economic data, including on jobs, being postponed and muddying the waters for the Federal Reserve as it tries to decide on its rate plans.
"The rapid rise in gold prices has been supported by rising inflows into (exchange-traded funds) and central bank buying, including solid demand from China, as gold benefits from political, economic, and inflation uncertainty," wrote Taylor Nugent at National Australia Bank.
While gold traders were busy pushing the metal ever higher, equity markets in Asia were more subdued as questions arose about the hundreds of billions of dollars invested in artificial intelligence.
The AI boom has seen some indexes and companies hit record highs, with chip titan Nvidia topping a $4 trillion valuation.
But a report that software firm Oracle's cloud computing profit margin was much lower than expected sent shivers through trading floors, with all three main indexes on Wall Street falling into the red.
"In a market priced for perfection, any delay in cash flow -- even a temporary one -- feels like the bartender calling 'last call, '" wrote Stephen Innes of SPI Asset Management.
"Traders didn't wait for clarification; they simply started easing out of their positions. The Oracle story didn't crash the party, but it definitely sobered it."
Tech firms, which have enjoyed strong buying this year and in recent months, led selling in Asia.
Hong Kong and Taipei were among the biggest losers, while Sydney and Singapore also fell.
Tokyo was marginally higher, helped by lingering optimism that the election of business-friendly conservative Sanae Takaichi as the ruling party's leader will see more stimulus measures and a fresh push for monetary easing.
What's driving gold's surge?
-Gold is traditionally viewed as a safe-haven investment, helping to fuel demand amid geopolitical unrest driven by the Russia-Ukraine war and Israel-Gaza conflict. The US government shutdown and expectations of further cuts to Federal Reserve interest rates, which are weighing on the dollar, are lending additional support to gold, according to analysts. Concerns over the Fed's independence, sparked by President Donald Trump's criticism of the US central bank for not cutting interest rates quickly enough, are another boost for the metal.
There are also worries over mounting government debt in major economies and uncertainty created by Trump's tariffs.- Who is buying gold? -In July, the World Gold Council (WGC) reported that gold demand showed annual growth of three percent in the second quarter to 1,249 tonnes, thanks to "an increasingly unpredictable geopolitical environment and price momentum".The industry body added that central bank buying was "at significantly elevated levels due to ongoing economic and geopolitical uncertainty".
There has also been strong demand for gold via exchange-traded funds on stock markets.ETFs allow investment without trading on the gold futures market."While early gains this year were driven by tariff-induced volatility in the second quarter, recent momentum has been fuelled by strong sentiment and record inflows into gold-backed exchange-traded funds," Flax said.
The high-price environment has, however, dampened jewellery demand, according to the WGC.- Other assets in demand? -Gold is not the only asset enjoying a record run higher, with major stock markets and bitcoin also hitting fresh peaks.
Bitcoin's record high Sunday comes "as gold continues its surge, suggesting that investors around the globe continue to look for diversification, though with stocks at record highs too, there looks to be plenty of liquidity to go around", noted Chris Beauchamp, chief market analyst at trading platform IG. The cryptocurrency topped $126,000 for the first time Tuesday, while Wall Street, along with the London and Tokyo stock markets, have all hit new records in recent sessions.
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