Gold prices surged again on Tuesday, reaching record levels and positioning the metal for its strongest monthly performance since 2009. The rally has been driven by rising concerns over a potential U.S. government shutdown and growing expectations of further Federal Reserve interest rate cuts, boosting demand for gold as a safe-haven asset.
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Spot and Futures Prices: Spot gold rose 0.4% to $3,848.65 per ounce as of 03:09 GMT. The metal has gained 11.6% so far this month, on track for its best monthly performance since August 2011 if the momentum continues. U.S. December gold futures rose 0.6% to $3,877 per ounce.
Market Drivers: Tim Wetter, Chief Market Analyst at KCM Trade, noted that “the looming threat of a government shutdown creates market uncertainty, accelerating gold gains.” He added that the $4,000 level is now a feasible target by year-end, supported by low interest rates and ongoing geopolitical tensions.
U.S. Political Context: President Donald Trump and congressional Democrats made little progress in White House meetings aimed at preventing a government shutdown, which could disrupt a wide range of federal services starting Wednesday.
Monetary Policy: Recent economic data have reinforced expectations of further Federal Reserve rate cuts this year. Traders currently price in roughly an 89% probability of a 25-basis-point reduction at the next Fed meeting, according to CME Group’s FedWatch tool. Low interest rates typically enhance gold’s appeal as a store of value during periods of political and financial uncertainty.
Investor Sentiment: SPDR Gold Trust, the world’s largest gold-backed ETF, saw its holdings rise 0.6% on Monday to 1,011.73 metric tons, the highest level since July 2022.
Upcoming U.S. Data: Investors are awaiting key U.S. economic reports this week, including job openings, private sector payrolls, the ISM manufacturing index, and the nonfarm payroll report scheduled for Friday, for indications on economic health. A partial government shutdown could delay these reports, as confirmed by the U.S. Department of Labor.
Other Metals: Spot silver held at $46.93 per ounce, up 18.2% so far this month, on track for its best month since July 2020. Platinum fell 0.8% to $1,588.70, while palladium dropped 0.7% to $1,258.60.
Gold’s surge reflects a combination of political uncertainty, expectations of lower interest rates, and sustained safe-haven demand.
