Gold surged to an all-time high above $3,800 per ounce, driven by mounting investor anxiety over a looming U.S. government shutdown and expectations of further Federal Reserve rate cuts. By 03:34 ET, spot gold was up 1.4% at $3,810.85 per ounce, while gold futures gained 0.8% to $3,839.10 per ounce.
Bullion, which traditionally thrives in periods of political instability and monetary easing, is benefiting from both dynamics. Ongoing bets that the Fed will continue lowering interest rates have bolstered the rally, with investors seeking safety from volatility in financial markets.
The potential for the 15th U.S. government shutdown since 1981 loomed large as lawmakers approached a fiscal deadline. Congress faces the pressure of passing a stopgap funding bill before the fiscal year ends on Tuesday, or the federal government risks partial closure.
Republicans control both chambers of Congress, but the passage of any measure requires some Democratic votes. Democrats have resisted a short-term deal, calling instead for legislation to reverse Republican-driven cuts to health care programs.
The surge in gold coincided with gains across broader metal markets. Prices advanced against a weaker U.S. dollar, which lost ground after inflation data last week came in broadly in line with expectations, fueling wagers that the Fed could deliver additional cuts before the end of 2025.
For metals traders, dollar softness is crucial since commodities priced in the greenback become cheaper for holders of other currencies. This dynamic provided an added lift to gold’s breakout above $3,800.
Despite uncertainty in Washington, U.S. stock futures were trading higher on Monday. By 02:56 ET, Dow futures rose 161 points, or 0.4%, S&P 500 futures gained 27 points, or 0.4%, and Nasdaq 100 futures advanced 124 points, or 0.5%.
Major indices had ended the last session in positive territory, supported by inflation numbers that matched expectations. Yet, the S&P 500 and Nasdaq Composite closed the week lower, snapping three-week winning streaks and signaling growing caution.
Investors are watching Friday’s nonfarm payrolls report for signs of labor market health. Economists expect 51,000 jobs to have been added in September, up from 22,000 in August, with unemployment holding at 4.3%.
The Federal Reserve, which cut rates by 25 basis points earlier this month, has indicated that slowing employment conditions remain its top priority, even as inflation pressures persist. A collection of Fed projections shows members anticipate further rate reductions before year-end.
With gold breaking new records, traders are weighing how long the rally can last. Safe-haven demand linked to fiscal uncertainty and expectations of further monetary easing remain the primary drivers.
Unless political leaders in Washington quickly resolve the shutdown standoff and labor market data surprise to the upside, bullion looks set to hold its elevated position. For now, gold continues to glitter as one of the few assets offering refuge from uncertainty.