🔗 Share this article

Good morning, and join us for our ongoing updates of business, the financial markets and the world economy.

Gold Hits Unprecedented $4,000 Mark

The price of gold has climbed beyond $4,000 an ounce for the first occasion, continuing a climb fuelled by concerns over political uncertainty in the Japanese market, the French economy and the United States, where the government closure has continued.

Spot gold increased by more than one percent to $4,029.46 an ounce, a further record high, and is higher fifty percent so far this year. This is after gains of 27% last year and 13% the year before.

The valuable commodity is seen as a safe-haven in times of turmoil, and also employed as a protection against increasing prices.

Investor Perspective and Market Views

Investment fund investor a market expert likened the current period to the early 1970s when soaring inflation and high government debt levels and expenditure undermined confidence in other assets.

It’s very much like the 1970s ... where should you place your money?

Gold is a very excellent diversifier in the investment mix. If you consider it just from a strategic asset allocation perspective, you would perhaps have something like 15% of your portfolio in gold … because it is an investment that does very well when the standard elements of the holdings go down.

Trader interest for gold investments seems undiminished. Market participants have been investing heavily in gold ETFs with investments totaling $64bn so far this year, according to the market authority, with a record $17.3bn in the previous month. National banks have also been acquiring gold.

Drivers Explaining the Gold Rally

Predictions of further US interest rate cuts, worries over global instability, import duties and an artificial intelligence speculation, along with a weak dollar have propelled the surge in gold.

A commodities strategist, investment analyst at a financial institution, said:

Gold has staged a unprecedented climb, increasing twofold in a short period, spurred by monetary authority purchases as it moves from the dollar, President Donald Trump’s aggressive trade policy and conflicts in the Middle East and Ukraine.

In the future, central banks are still buying – the People’s Bank of China extended its purchasing run in September for an extended period despite historic levels – Trump’s trade war is ongoing, geopolitical risks remain elevated, and fund investments continue to expand while predictions of more Fed rate cuts intensify. This entire situation implies that gold has more potential for growth.

Automotive Group Reports of Earnings Hit

The British car dealership group Vertu Motors has warned of a £5.5m reduction in its annual profits from “significant disruption” to its Jaguar Land Rover retail outlets after the automotive manufacturer paused production for several weeks following a major security breach.

Vertu’s chief executive Robert Forrester said it was a setback for the sector to face major disruption across the JLR network” during September, a important period for automotive transactions as license plates are refreshed.

Whilst the circumstances are changing, it looks to be resolving in the past week.

Vertu, which is based in Gateshead, announced all-time high revenues of £2.51 billion for the six months to the end of August, up from £2.47bn a year earlier. Adjusted pre-tax profit dropped by 10% to twenty million pounds.

Additional Financial Developments

• Resource stocks are currently top performers on the London stock market, on the back of the ongoing gold climb.
• Car finance scandal: bank shares increase on relief over regulatory news.
• Petroleum values rise 1% as oversupply fears diminish after Opec+ limits production growth.
• Germany’s manufacturing output ‘drops like a stone’, raising recession risk.

Today’s Schedule

• Government meeting
• 14:00 UK time: International Monetary Fund head the director speech
• 16:00 UK time: Huw Pill presents in the conference location
• 19:00 UK time: US Federal Reserve minutes of previous session