Gold prices reached a historic high, nearing the $4,000 per ounce mark amid ongoing disruptions caused by the prolonged U.S. federal government shutdown. The precious metal surged to $3,920.63 an ounce at one point before settling slightly lower. This shutdown has led to the postponement of crucial payroll data, initially set for release on Friday, complicating the economic outlook for traders and analysts.
In the absence of this significant economic data, market participants are increasingly relying on private reports to gauge the economic climate, posing challenges for the Federal Reserve in its monetary policy formulation. Traders anticipate a quarter-point interest rate cut at the end of the month, a move that could provide further support for gold, especially since the metal does not generate interest.
Gold has seen a remarkable increase of nearly 50% this year, driven by considerable economic and geopolitical uncertainties associated with the Trump administration’s policies. The Federal Reserve’s ongoing rate-cutting efforts and central bank strategies to diversify away from dollar-denominated assets have also contributed significantly to this rise.
Analysts suggest that while the fundamental conditions remain favorable for gold, the dynamics of risk and reward may be shifting. Ahmad Assiri of Pepperstone Group Ltd noted that while the backdrop for gold remains strong due to the Fed’s inclination to lower rates and signs of a weakening labor market, a tactical pullback could present a healthy phase within a broader rally.
As of 8:45 a.m. Singapore time, gold was trading at $3,905.54 an ounce, reflecting a 0.5% increase after marking its seventh consecutive weekly gain. Meanwhile, the Bloomberg Dollar Spot Index rose by 0.3%, with other precious metals including silver, platinum, and palladium also witnessing gains in this tumultuous economic landscape.
