Gold reached record levels in early Asian trading on Monday as concerns over a potential U.S. government shutdown this week drove safe-haven demand, while expectations of lower interest rates added further support.
Spot gold hit $3,812 an ounce, with December futures topping out at $3,839.05/oz. Other metals also advanced strongly, benefiting from a weaker dollar and last week’s inflation data, which maintained market optimism about additional Federal Reserve rate reductions. Silver and platinum surged to multi-year highs, reflecting broad investor interest in precious metals.
Potential U.S. Government Shutdown Weighs on Markets
Markets are watching closely as funding for the U.S. federal government is set to expire at midnight on September 30. Congress has yet to approve either a replacement or extension.
Negotiations remain tense: Republicans favor a stopgap funding bill through November, while Democrats are demanding the reversal of recent healthcare and Medicaid cuts before agreeing to any further appropriations. Leaders from both parties are scheduled to meet President Donald Trump on Monday for mediation talks.
If unresolved, a government shutdown could delay critical economic releases, including the September nonfarm payrolls report, and disrupt wider economic activity. The last partial shutdown in late 2018 to early 2019 lasted 35 days, with the Congressional Budget Office estimating a roughly $11 billion reduction in GDP.
Silver and Platinum Lead Metal Rally
Precious metals broadly advanced on Monday. Spot silver rose over 2% to $47.1765/oz, reaching a 14-year high, while spot platinum gained 3.2% to $1,626.06/oz, the highest level in more than 12 years.
A weaker U.S. dollar and growing expectations of Federal Reserve rate cuts helped fuel the rally. August PCE price index data released Friday supported the possibility of rate reductions, even as core inflation remains above the Fed’s 2% annual target.
Markets currently assign a 91.9% probability to a 25-basis-point rate cut in October, and a 64.2% chance of an additional cut in December, according to CME FedWatch.
Industrial metals also benefited, with London Metal Exchange copper futures up 0.6% to $10,276.45 per ton, and COMEX copper advancing 1.3% to $4.8065 per pound.
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