Gold prices hovered close to all-time highs in Thursday’s Asian trading session, buoyed by safe-haven demand as political gridlock in Washington triggered a U.S. government shutdown. Investors also positioned for more Federal Reserve interest rate cuts, adding momentum to the rally.
- Spot gold: $3,864.63/oz
- December futures: $3,889.65/oz (down 0.2%)
- Weekly peak: $3,895.33/oz (Wednesday record)
The shutdown, which began after lawmakers failed to agree on a spending bill, has already delayed the release of crucial economic indicators. The widely watched nonfarm payrolls report, scheduled for Friday, is now postponed until at least next week.
Shutdown Extends Economic Uncertainty
The U.S. government is expected to remain closed for at least three days, halting numerous federal services. The longer the deadlock drags on, the greater the potential strain on economic growth. Market participants are also weighing political risks after reports that President Donald Trump may push for further federal workforce cuts.
Private payrolls data, released Wednesday, revealed additional cooling in the labor market, reinforcing expectations that the Federal Reserve will maintain an easing bias. The dollar weakened in response, offering further support to gold and other metals.
Other precious metals followed a mixed path:
- Platinum: $1,563.46/oz (steady)
- Silver: $47.25/oz (down 0.2%)
Both reached decade highs earlier in the week before pausing Thursday.
Industrial metals were comparatively firmer. London copper futures gained 0.4% to $10,422.05/ton, while COMEX copper futures edged up 0.4% to $4.9145/pound, supported by resilient demand expectations.
Markets See 97% Chance of October Rate Cut
Investors are now pricing in a 97% probability of a 25-basis-point rate cut by the Fed later this month, according to CME FedWatch data. A smaller 3% of traders expect a more aggressive half-point cut.
The Fed’s September decision already delivered a 25-basis-point reduction, citing labor market weakness and slowing economic activity. However, policymakers remain divided. Inflation remains above the 2% target, with the August core PCE index showing persistent price pressures.
Analysts warn that sticky inflation may limit the Fed’s ability to ease aggressively, creating a delicate balancing act between supporting growth and maintaining price stability.
For now, investors continue to favor gold as an insurance asset, with the metal’s record-breaking performance underscoring its role as a hedge against both political dysfunction and economic uncertainty.