Gold prices surge to fresh all-time high on US govt shutdown, Fed rate cut bets

By Admin

06 Oct, 2025

Global gold markets witnessed a historic milestone as prices surged past $3,900 per ounce for the first time, fueled by rising safe-haven demand amid the ongoing US government shutdown and growing expectations of Federal Reserve rate cuts.

Record-Breaking Rally in Global Markets
Spot gold jumped 0.9% to $3,922.28 per ounce by 0208 GMT on Monday, after briefly touching an all-time high of $3,924.39 earlier in the session. Meanwhile, U.S. gold futures for December delivery advanced 1% to $3,947.30. The rally comes as investors flock toward gold to shield their portfolios from economic uncertainty and policy risks in the United States.

Safe-Haven Demand Amid Political Turmoil
The US government shutdown has created widespread concern over economic stability, prompting investors to seek refuge in assets like gold. “The enduring U.S. government shutdown means that a cloud of uncertainty still hangs over the U.S. economy and the potential size of any GDP impact,” said Tim Waterer, Chief Market Analyst at KCM Trade.

Compounding this, yen weakness following Japan’s LDP elections, which saw fiscal dove Sanae Takaichi become the next Prime Minister, reduced investor interest in the yen as a traditional safe haven. “Yen weakness has left investors with one less safe-haven asset to go to, and gold was able to capitalise,” Waterer added.

Trump Administration’s Standoff and Market Reactions
The Trump administration is reportedly preparing for mass layoffs of federal workers if negotiations with congressional Democrats fail to end the partial government shutdown. This political deadlock has further shaken investor confidence, driving a flight toward precious metals.

Federal Reserve’s Dovish Outlook Fuels Momentum
The Federal Reserve’s dovish stance has also bolstered gold’s upward momentum. Fed Governor Stephen Miran reiterated support for an aggressive rate cut strategy, highlighting the economic fallout from government policies. The Fed had previously cut rates by 0.25 percentage points last month and hinted at further reductions this year.

According to the CME FedWatch tool, investors are pricing in two additional 25-basis-point cuts   one in October (95% probability) and another in December (83% probability). Lower interest rates typically benefit non-yielding assets like gold, making them more attractive in comparison to bonds and other income-generating investments.

Year-to-Date Gains and Market Outlook
Gold has been on an extraordinary run in 2025, rising 49% so far this year following a 27% jump in 2024. This rally has been supported by strong central bank buying, robust ETF inflows, a weaker U.S. dollar, and growing retail investor interest amid trade and geopolitical tensions.

The metal broke through key milestones this year   $3,000 per ounce in March and $3,700 in mid-September   and many brokerages have since turned bullish on gold’s long-term trajectory.

Other Precious Metals Also Shine
The surge wasn’t limited to gold. Spot silver climbed 0.8% to $48.33 per ounce, platinum rose 1.1% to $1,621.90, and palladium gained 0.8% to $1,270.25, reflecting broader optimism across the precious metals market.

Conclusion: Gold’s Safe-Haven Status Reinforced
As global uncertainties deepen, gold’s reputation as a safe-haven asset has been reaffirmed. With the U.S. government shutdown, yen weakness, and anticipated Fed rate cuts all fueling investor anxiety, the precious metal is poised to remain a preferred hedge in turbulent times.

Analysts believe that if economic instability continues and the Fed maintains its easing path, gold prices could climb even higher, solidifying its dominance as the world’s most trusted store of value.