Gold climbs to record high amid US government shutdown and expectations of Fed rate cuts
Global gold prices surpass $3,900 per ounce amid safe-haven demand, US Fed rate cut hopes
Gold prices surged past $3,900 per ounce for the first time on Monday, driven by safe-haven demand amid the US government shutdown and expectations of further easing by the US Federal Reserve.
Spot gold rose 0.9% to $3,922.28 per ounce by 0208 GMT, after touching an all-time high of $3,924.39 earlier in the session. Meanwhile, US gold futures for December delivery climbed 1% to $3,947.30.
"Yen weakness following Japan’s LDP elections has removed one safe-haven option for investors, allowing gold to benefit," said Tim Waterer, Chief Market Analyst at KCM Trade. He added, "The ongoing US government shutdown continues to cast uncertainty over the economy and potential GDP impact."
Gold is traditionally seen as a reliable asset during such times, particularly with markets expecting further Fed rate cuts later this month, Waterer noted.
The Japanese yen fell sharply against the US dollar, marking its largest drop in five months after Sanae Takaichi was elected to lead the ruling party and become the next prime minister. In the US, federal layoffs could begin if negotiations between President Trump and congressional Democrats fail to resolve the partial government shutdown, a senior White House official said.
Fed Governor Stephen Miran recently advocated for an aggressive rate-cut strategy, citing the economic impact of Trump administration policies.
Gold has seen a remarkable 49% rise in 2025, following a 27% gain in 2024. Factors contributing to the rally include strong central bank purchases, growing interest in gold-backed ETFs, a weaker dollar, and heightened demand from retail investors seeking a hedge against trade and geopolitical tensions.
The rally received additional momentum last month after the Fed reduced rates by 25 basis points and signaled further easing for the rest of the year. According to the CME FedWatch Tool, markets are pricing in additional 25-basis-point cuts in October and December, with probabilities of 95% and 83%, respectively.
Gold benefits in a low interest rate environment and during periods of economic uncertainty. Spot gold broke $3,000 per ounce in March and $3,700 in mid-September, prompting many brokerages to turn bullish on the rally.
Other precious metals also advanced: spot silver rose 0.8% to $48.33 per ounce, platinum gained 1.1% to $1,621.90, and palladium increased 0.8% to $1,270.25.
