Gold prices soared to a record high on Tuesday, largely fueled by an ongoing stalemate between the two chambers of the U.S. Congress, which has resulted in a government shutdown. The market’s anticipation of a likely interest rate cut by the Federal Reserve this month further bolstered investor confidence in the precious metal.
As of early morning trading, spot gold was up 0.1% at $3,965.39 per ounce, following a significant peak of $3,977.19 earlier in the session. In the futures market, December gold contracts rose by 0.3%, reaching $3,988.10 per ounce.
According to Kelvin Wong, a senior market analyst at OANDA, the near-unanimous expectations of interest rate cuts in October and December—which are currently hovering above the 80% probability mark—have acted as critical support for gold prices. The persistent government impasse in Congress, with no resolutions in sight, adds additional uncertainty that typically benefits gold investments.
Despite the bullish sentiment in the market, Kansas City Fed Bank President Jeff Schmid expressed reluctance towards further interest rate cuts, emphasizing the need for the Federal Reserve to focus on the ongoing risk of inflation rather than the apparent weaknesses in the job market. Nevertheless, markets are still pricing in a 95% chance of a 25 basis-point cut in October and an 83% probability for December, as indicated by the CME FedWatch tool.
Gold tends to thrive in low-interest-rate environments and during times of economic uncertainty. So far this year, gold has appreciated by 51%, largely driven by robust central bank purchasing, a rise in demand for gold-backed Exchange-Traded Funds (ETFs), a declining dollar, and heightened interest from retail investors looking to hedge against escalating trade and geopolitical tensions.
On Monday, Goldman Sachs raised its long-term gold price forecast for December 2026, adjusting it to $4,900 per ounce from a previous estimate of $4,300. This revision was influenced by strong inflows into Western ETFs and continued central bank acquisitions.
In related market movements, silver saw a slight decline of 0.1%, settling at $48.49 per ounce, while platinum decreased by 0.4% to $1,619.62. Conversely, palladium experienced a modest increase of 0.1%, reaching $1,325.71.
