Stocks slip as gold tops $4,000 amid political uncertainty

US and global stocks fell on Tuesday while gold prices surged toward record highs, as investors weighed deepening political turmoil in France and the ongoing U.S. government shutdown.

After opening higher, Wall Street equities lost momentum and drifted into negative territory, with analysts pointing to a cooling market after a strong recent run.

“The momentum is beginning to dry up,” said Chris Low, chief economist at FHN Financial. “It feels like a bout of profit-taking — investors are waiting for a new catalyst.”

All three major U.S. indices ended lower, with the S&P 500 slipping 0.4%.

Europe Mixed as French Political Crisis Deepens

In Europe, Paris stocks rebounded slightly following Monday’s steep sell-off, even as President Emmanuel Macron faced renewed political pressure. His former prime minister, Edouard Philippe, publicly urged him to resign and call an early presidential election, as France struggles with a worsening budget and political crisis.

Markets in London and Frankfurt closed largely unchanged, while the euro weakened further against the dollar.

Gold shines as safe-haven demand rises

Gold prices surged, passing the $4,000 per ounce mark, with futures briefly crossing the symbolic level. Analysts said the metal’s rally has been driven by a mix of geopolitical risk, tariff uncertainty, stubborn inflation, and expectations of lower U.S. interest rates.

“Uncertainty around the government shutdown and prospects for Fed rate cuts have only added fuel to this year’s gold rally,” said Bret Kenwell of eToro.

The U.S. government shutdown, now in its seventh day, showed little sign of resolution, as lawmakers remained deadlocked.

Asia sees mixed reaction to Japan’s political shift

In Asia, Tokyo stocks hit fresh record highs early in the session following the weekend election of Sanae Takaichi as leader of Japan’s ruling party. Takaichi, who is expected to become prime minister later this month, has pledged fiscal stimulus and pro-growth policies, lifting optimism over Japan’s economic outlook.

However, the rally faded by the close, with the Nikkei ending flat. Yields on 30-year Japanese bonds climbed to their highest level in years, reflecting investor concern over the country’s massive debt burden.

Corporate movers

Among major U.S. companies, Tesla fell 4.5% after unveiling revamped models at slightly lower prices, disappointing investors who had expected deeper cuts following the expiry of a federal tax credit.

Ford shares tumbled 6.1% after a fire at an aluminum plant in Oswego, New York, which is expected to disrupt supply to the automaker for several months.

As political and economic uncertainty mount, investors appear to be seeking safety in gold and government bonds, while equity markets show signs of fatigue after months of strong gains.

Key figures at around 2015 GMT
New York - Dow: DOWN 0.2 percent at 46,602.98 (close)
New York - S&P 500: DOWN 0.4 percent at 6,714.59 (close)
New York - Nasdaq Composite: DOWN 0.7 percent at 22,785.97 (close)
London - FTSE 100: UP less than 0.1 percent at 9,483.58 (close)
Paris - CAC 40: UP less than 0.1 percent at 7,974.85 (close)
Frankfurt - DAX: UP less than 0.1 percent at 24,385.78 (close)
Tokyo - Nikkei 225: FLAT at 47,950.88 (close)
Hong Kong - Hang Seng Index: Closed for a holiday
Shanghai - Composite: Closed for a holiday
Euro/dollar: DOWN at $1.1652 from $1.1711 on Monday
Pound/dollar: DOWN at $1.3422 from $1.3485
Dollar/yen: UP at 151.97 yen from 150.35 yen
Euro/pound: DOWN at 86.83 pence from 86.85 pence
Brent North Sea Crude: DOWN less than 0.1 percent at $65.45 per barrel
West Texas Intermediate: DOWN 0.1 percent at $61.73 per barrel