(Reuters) -Gold surged past the $4,000 an ounce level for the first time on Wednesday, building on a record-breaking rally as broader geopolitical and economic uncertainty, as well as expectations of U.S. interest rate cuts sent investors flocking to the safe-haven asset. 

Spot gold was up 1.6% at $4,045.19 per ounce by 11:38 a.m. ET (1538 GMT). U.S. gold futures for December delivery gained 1.6% to $4,067.00.

   Silver also latched on to gold's rally, gaining 3.3% to $49.39 per ounce, and hovering just below its all-time high of $49.51.

Gold, traditionally seen as a store of value during times of instability, is up 54% year-to-date, after gaining 27% in 2024. It is one of the best-performing assets of 2025, outpacing advances in global equity markets and bitcoin and losses for the U.S. dollar and crude oil.

Its rally has been propelled by a combination of factors, including expectations of U.S. interest rate cuts, mounting political and economic uncertainty, strong central bank buying, hefty inflows into gold-backed ETFs and a weakening dollar.

"Gold's strength reflects an extremely positive macroeconomic and geopolitical background for safe-haven assets, plus concerns over other traditional safe havens," said Matthew Piggott, director of gold and silver at Metals Focus.

"With these factors persisting into 2026, we fail to see any catalyst for gold to meaningfully retrace at present. Therefore we expect gold to continue to push up throughout the year to attempt a challenge of $5,000/oz."

The U.S. government shutdown entered its eighth day on Wednesday, delaying the release of key economic data and forcing investors to rely on non-government sources to assess the timing and scope of Fed rate cuts. [MKTS/GLOB]

Markets are pricing in a 25-basis-point rate cut at the Fed's upcoming meeting, with a similar reduction expected in December. 

Global crises, such as the Middle East conflict and the war in Ukraine, have stoked demand for bullion, while political turmoil in France and Japan added to the flight to gold.

Globally, inflows into gold ETFs hit $64 billion year-to-date, according to data from the World Gold Council, with a record $17.3 billion in September alone.

A "fear of missing out" is also boosting the rally, analysts said.

On a technical basis, gold's Relative Strength Index (RSI) stands at 88, indicating the metal is overbought.

Silver was up 71% so far this year, benefiting from the same factors driving gold's rally as well as tightness in the spot market. 

"The silver market continues to tighten, with rising lease rates, as Comex stocks scale record highs and amid India's seasonal demand strength. The recent rally has been supported by hefty ETP inflows," said Suki Cooper, Global Head, Commodities Research at Standard Chartered Bank.

HSBC on Wednesday raised its average silver price forecasts for 2025 to $38.56 per ounce and for 2026 to $44.50, citing expectations for high gold prices, renewed investor demand and anticipated volatile trading.

The momentum seeped into other precious metals as well, with platinum gaining 2% to $1,651.51, while palladium climbed 7.2% to $1,433.63, to its highest level since June 2023.