Gold Nears Record High as Shutdown and Rate-Cut Hopes Lift Demand

Gold Nears Record High as Shutdown and Rate-Cut Hopes Lift Demand

The gold rally surged anew as safe-haven demand and stimulus hopes dominated market sentiment. Bullion hovered close to its all-time high, reflecting intense investor interest, driven by global uncertainty and central-bank policy expectations.

Spot gold rose by around 0.2 % to about US $4,363.58 per ounce, after reaching a record US $4,381.21 the prior day. Meanwhile, US gold futures for December delivery climbed to roughly US $4,379 per ounce. These levels show the depth of the gold rally.

Shutdown Uncertainty Continues and Gold Becomes More Attractive

A key driver lies in the ongoing US government shutdown, now extending into its 20th day. The impasse has stalled critical economic data releases and heightened investor caution. With fresh data missing, markets face a data vacuum ahead of the Federal Reserve policy meeting next week.

Rate-cut expectations now dominate. Markets firmly price in a 25-basis-point cut by the Federal Reserve this month, followed by another in December. For a non-yielding asset like gold, a lower-rate environment boosts appeal and supports the gold rally.

Geopolitical tensions add fuel. Investors also watch upcoming US–China trade talks as part of a broader backdrop of global uncertainty. That dynamic elevates safe-haven assets like gold further.

ETF Inflows and Mixed Metal Moves Shape Market Mood

Another notable factor: the largest gold-backed exchange-traded fund, the SPDR Gold Trust, increased its holdings to 1,058.66 metric tons on Monday, up from 1,047.21 tons on Friday. This inflow points to strong institutional demand anchoring the gold rally.

In contrast, other precious metals showed mixed performance: spot silver edged down 0.3 % to US $52.29 per ounce, platinum gained 0.3 % to US $1,643.48 and palladium ultimately rose 0.6 % to US $1,504.72 per ounce.

Analysts suggest that if uncertainty lingers and the Fed proceeds with further cuts, gold could test US $4,500 per ounce or beyond. However, some technical voices caution that the rapid rise might signal an overheated phase.

Markets now face a dual test: the release of delayed US inflation data on Friday and the policy direction of the Fed. Should inflation remain elevated, economists estimate a 3.1 % year-over-year rise in September, it might complicate further rate cuts and temper the gold rally.

In summary, the gold rally stands on three pillars: safe-haven demand sparked by economic and political uncertainty, strong expectations of rate cuts by the Fed, and institutional flows into gold vehicles. This convergence keeps the gold rally near historic highs.