Gold prices climbed to unprecedented levels in early Asian trading on Monday, driven by safe-haven demand amid growing fears of a potential U.S. government shutdown this week. Expectations of lower interest rates also supported the rally.
Spot gold reached a record $3,812 an ounce, while December gold futures hit a peak of $3,839.05/oz. Other metals also saw strong gains, buoyed by a softer dollar following inflation data last week that reinforced market expectations for additional Federal Reserve rate cuts. Silver and platinum rose to more than a decade-high, reflecting broad-based investor interest in precious metals.
U.S. Government Shutdown Risks in Focus
The potential shutdown of U.S. federal operations has heightened haven demand. Funding for the federal government is set to expire at midnight on September 30, with Congress yet to agree on replacement or extension funding.
Bipartisan negotiations are ongoing. Republicans are reportedly advocating a short-term funding bill through November, while Democrats insist on reversing recent healthcare and Medicaid cuts before approving further spending legislation. Congressional leaders from both parties are scheduled to meet President Donald Trump on Monday to mediate.
A government shutdown could postpone the release of key economic data, including September’s nonfarm payrolls, and disrupt broader economic activity if unresolved. The last partial federal shutdown in late 2018 to early 2019 lasted 35 days, and the Congressional Budget Office estimated it reduced U.S. GDP by roughly $11 billion.
Silver and Platinum Hit Multi-Year Highs
Precious metals broadly advanced on Monday, with silver and platinum outperforming gold. Spot silver jumped over 2% to $47.1765/oz, a 14-year high, while spot platinum rallied 3.2% to $1,626.06/oz, marking its highest level in more than 12 years.
A weaker U.S. dollar and market expectations of Federal Reserve rate cuts further fueled the gains. August PCE price index data, released Friday, supported the notion of rate cuts despite core inflation remaining above the Fed’s 2% annual target.
Markets are currently pricing in a 91.9% probability of a 25-basis-point rate cut in October and a 64.2% chance of an additional 25-basis-point reduction in December, according to CME FedWatch data.
Expectations of further rate easing have also boosted industrial metals. London Metal Exchange copper futures rose 0.6% to $10,276.45 per ton, while COMEX copper gained 1.3% to $4.8065 per pound.
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