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Good morning, and welcome to our ongoing updates of the economy, the financial markets and the international finance.

Gold Reaches Historic $4,000 Level

The value of gold has climbed beyond $4,000 an ounce for the first time, fueling a climb fuelled by worries over political drama in the Japanese market, France and the United States, where the federal government shutdown has dragged on.

Spot gold rose by over 1% to $4,029.46 an ounce, a further record high, and is higher 50% so far this year. This comes after rises of twenty-seven percent last year and thirteen percent the year before.

The safe-haven asset is seen as a safe-haven in periods of uncertainty, and also employed as a protection against increasing prices.

Market Outlook and Analyst Comments

Investment fund tycoon Ray Dalio likened the existing climate to the early 1970s when soaring inflation and substantial public borrowing and expenditure eroded trust in different holdings.

It’s very much like the 1970s ... where do you put your money?

Gold is a very excellent diversifier in the portfolio. If you examine it just from a portfolio planning viewpoint, you would likely have around 15% of your investments in gold … because it is an investment that performs strongly when the typical parts of the holdings fall.

Market demand for gold investments seems strong. Traders have been investing heavily in gold funds with capital entering totaling $64bn so far this year, as reported by the gold industry body, with a all-time high $17.3bn in September alone. Central banks have also been adding to reserves.

Drivers Fueling the Surge in Gold

Expectations of further US interest rate cuts, worries over global instability, import duties and an AI bubble, along with a declining US currency have fueled the surge in gold.

Ewa Manthey, commodities strategist at a financial institution, said:

Gold has staged a record surge, increasing twofold in less than two years, driven by monetary authority purchases as it moves from the dollar, the US President’s aggressive trade policy and tensions in the Gulf region and Ukraine.

In the future, national banks are continuing to purchase – the Chinese central bank extended its purchasing run in September for an eleventh month in a row despite record high prices – Trump’s trade war is continuing, geopolitical risks persist, and fund investments keep growing while predictions of more Fed rate cuts strengthen. This entire situation suggests that gold has still further room to run.

Automotive Group Reports of Earnings Hit

The British car dealership group Vertu Motors has alerted to a £5.5m impact on its full-year income from operational challenges to its JLR dealerships after the car company stopped output for several weeks following a serious hack.

Its top executive the CEO said it was a setback for the sector to experience significant issues across the manufacturer’s dealerships” during the previous month, a key month for automotive transactions as registration identifiers are updated.

Whilst the situation is fluid, it looks to be resolving in recent days.

The firm, which is headquartered in near Newcastle, reported all-time high revenues of £2.51 billion for the first half to the end of August, higher than previous year’s figure a year earlier. Operating income fell by ten percent to twenty million pounds.

Further Economic Updates

• Mining shares are showing strong growth on the FTSE 100 index, on the because of the inexorable gold rally.
• Vehicle financing dispute: lender stocks climb on reassurance from FCA update.
• Petroleum values climb slightly as surplus worries ease after producer group curbs supply rise.
• German industrial production falls significantly, pointing to economic contraction.

The Agenda

• Political gathering
• Afternoon session: IMF managing director the IMF chief presentation
• 4pm BST: Bank of England official presents in the conference location
• 7pm BST: US Federal Reserve minutes of last month’s gathering