Gold Prices Hit Record High Amid US Shutdown Fears and Interest Rate Cut Speculation

Surging Demand for Safe-Haven Assets Pushes Gold Above $3,800/oz

Gold prices soared to all-time highs in Asian trading on Monday, driven by investor anxiety over a potential United States government shutdown and growing expectations of further interest rate cuts from the Federal Reserve.

Key Highlights

• Spot gold reached a record $3,812 per ounce, with December futures touching $3,839.05/oz.
• Silver and platinum also surged to multi-decade highs.
• A weakening US dollar and rate cut expectations are fuelling momentum.
• The looming US government shutdown is increasing safe-haven demand.

Why Gold Prices Are Climbing

Investors are turning to gold as a safe-haven asset amid political and economic uncertainty. The possibility of a US government shutdown—with federal funding due to expire on 30 September—has raised alarm bells in global markets.

Bipartisan talks in Congress have so far failed to produce a deal, with disputes between Republicans and Democrats over healthcare and Medicaid spending. President Trump is set to meet congressional leaders for emergency mediation talks.

A government shutdown could:

• Delay key economic data releases, including the nonfarm payrolls report.
• Disrupt short-term economic activity.
• Hurt GDP growth if prolonged. (The last major shutdown in 2018–2019 shaved $11 billion off US GDP.)

Interest Rate Cuts on the Horizon?

Markets are now pricing in the likelihood of Federal Reserve action:

• 91.9% probability of a 25 basis point rate cut in October.
• 64.2% chance of a further 25 bps cut in December (CME FedWatch).

Last week’s PCE inflation data—the Fed’s preferred gauge—showed inflation remained above the 2% target but was in line with expectations, reinforcing rate cut speculation.

A lower interest rate environment typically:

• Reduces the opportunity cost of holding non-yielding assets like gold.
• Weakens the US dollar, making commodities more attractive to global investors.

Silver and Platinum Rally to Decade Highs

Other precious metals also saw notable gains:

• Spot silver jumped over 2% to a 14-year high of $47.18/oz.
• Spot platinum rose 3.2% to a 12-year high of $1,626.06/oz.

This indicates broader investor movement into commodities, not just gold.

Impact on Industrial Metals and Markets

The rally wasn't limited to precious metals:

• Copper futures rose 0.6% on the London Metal Exchange to $10,276.45 per tonne.
• COMEX copper was up 1.3% to $4.81 per pound.

These moves highlight increasing confidence in a potential loosening of monetary policy and sustained demand in global manufacturing.

Outlook: Will Gold Continue to Rise?

With uncertainty surrounding US fiscal policy and potential Federal Reserve rate cuts, gold could see further upside in the near term. However, much depends on:

• Whether the US avoids a government shutdown.
• How inflation data evolves.
• The Fed’s tone and decisions in upcoming meetings.

If haven demand continues to rise and the dollar stays weak, gold could remain a strong performer. Investors may also look to increase exposure to silver and platinum, given their relative underperformance in prior years.

Sources: (Investing.com,Motley.com)