Gold Reaches Record High, Surpassing $3,812 Per Ounce Amid Political Uncertainty and Economic Factors
The price of gold hit an all-time high on Monday, soaring past $3,812 per ounce as political turbulence in Washington heightened investor concerns and increased demand for the safe-haven metal.
The surge was primarily driven by fears of a potential US government shutdown this week, stemming from a deadlock in Congress over a new spending bill. Market anxiety intensified as the House of Representatives narrowly approved a short-term funding measure, only for it to be blocked by Senate Democrats demanding bipartisan negotiations on healthcare budgets. President Donald Trump is set to meet congressional leaders on Monday in a final attempt to prevent a shutdown scheduled for Tuesday.
This situation echoes the last government shutdown in 2019, which lasted 35 days and cost the US economy an estimated $3 billion. The looming crisis has prompted investors to seek refuge in gold, boosting its price.
Adding to the rally, the US Dollar weakened, with the US Dollar Index dropping 0.2% against major currencies. Expectations of further interest rate cuts by the Federal Reserve also played a significant role. Recent US economic data, including a 0.3% rise in the August Personal Consumption Expenditures (PCE) index—an important inflation indicator—has reinforced speculation that the Fed will implement more rate cuts in upcoming meetings.
Kyle Rodda, an analyst at Capital.com, noted that the inflation data “solidified market belief that the Fed will cut interest rates again in October and December.” The market sentiment remains optimistic, with the CME FedWatch Tool indicating a 90% chance of a rate cut in October and a roughly 65% chance of another in December.
During Monday’s trading session in Asia, spot gold surged to a new all-time high of $3,812.00 per ounce, while US gold futures for December delivery reached a peak of $3,839.05 per ounce, reflecting the heightened investor demand driven by economic and political uncertainties.