Gold prices surged to fresh record highs in Asian trade on Tuesday, extending gains amid fears of an imminent U.S. government shutdown and expectations of further interest rate cuts by the Federal Reserve.
Spot gold touched a new peak of $3,865.73 an ounce, while gold futures climbed to $3,893.72/oz, marking roughly a 17% gain in the third quarter. Investors sought refuge in the yellow metal as market uncertainty over U.S. political and economic developments increased safe-haven demand.
US shutdown risk drives safe-haven buying
The growing possibility of a U.S. government shutdown has intensified market concerns. Congress must pass a spending bill by midnight, September 30 (0400 GMT Wednesday), to prevent the closure of hundreds of federal institutions.
While a Republican-backed bill cleared the House of Representatives, it faces resistance in the Senate, where a 60-vote threshold is required despite Republicans holding 53 seats. Bipartisan talks with President Donald Trump on Monday yielded little progress, with disagreements persisting over healthcare and social welfare spending.
Analysts note that government shutdowns disrupt economic activity and may delay the release of critical data, such as the September nonfarm payrolls, scheduled for Friday. The White House has also warned that a shutdown could result in thousands of federal job cuts, further straining the labor market.
Precious metals buoyed by rate cut expectations
Beyond gold, silver and platinum retreated slightly after record rallies on Monday but remained significantly higher in Q3. Spot platinum rose nearly 18% in the quarter, while silver gained 30%.
The Federal Reserve’s rate cuts have played a major role in supporting metals. Earlier this month, the Fed reduced rates by 25 basis points and indicated the potential for two further cuts in 2025, depending on inflation and labor market trends. Market expectations largely anticipate at least one additional cut in October, according to CME FedWatch data.
Lower rates have weakened the U.S. dollar, boosting metal prices. Precious metals outperformed industrial metals, with copper futures steadying at $10,418.60 a ton on the London Metal Exchange, up 5% in Q3. COMEX copper futures hovered around $4.9 a pound, gaining 11.4% over the same period.
Q3 performance reflects sustained investor optimism
The third quarter has been strong for metals, driven by safe-haven buying and positive sentiment surrounding potential rate cuts. Analysts highlight that macroeconomic uncertainties, including the risk of a U.S. shutdown and labor market concerns, are likely to sustain demand for gold and other precious metals in the near term.