Gold prices hit an all-time high on Monday (October 6), soaring above $3,900 an ounce, as investors flocked to safe-haven assets amid the US government shutdown, broader economic shutdown, and the prospect of further Federal Reserve interest rate cuts.

Spot gold prices rose 1.2% to $3,932.40 an ounce at 07:30 GMT, after reaching $3,944 earlier in the session.

US gold futures for December delivery rose 1.2% to $3,956.50.

Washington will begin mass layoffs of federal employees if US President Donald Trump decides negotiations with Democratic lawmakers to end the partial government shutdown are "completely fruitless," a senior White House official said on Sunday.

"There are concerns that (the US government shutdown) could drag on and negatively impact US growth," said independent analyst Ross Norman, adding that a widespread sense of caution in financial markets is also helping gold prices.

Gold has risen nearly 50% so far this year, supported by strong central bank buying, increased demand for gold-backed exchange-traded funds (ETFs), a weaker dollar, and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.

This rally, characterized by low participation and driven primarily by central banks with a long-term outlook and stable investors rather than speculative buyers, suggests that any downturn may be milder than expected, Norman said, adding that this could present a buying opportunity on dips while the rally maintains its momentum.

Fed Governor Stephen Miran again urged aggressive interest rate cuts on Friday, citing the impact of the Trump administration's economic policies.

Alternative data from public and private sources showed signs of weakness in the US labor market amid the government shutdown. Investors are now pricing in a 25 basis point interest rate cut at this month's Fed meeting, with an additional 25 basis point cut anticipated in December.

"We see fundamental and momentum reasons driving gold to rally further, and now suggest bullion will reach $4,200/oz by the end of this year," UBS said in a note.

Non-yielding gold thrives in a low interest rate environment and as long as it is close to the economy.

Spot gold broke through $3,000 per oz for the first time in March.

Many brokers are optimistic about this rally.

Spot silver rose 1.5% to $48.67 per oz, reaching its highest level in more than 14 years. Platinum rose 0.7% to $1,616, and palladium rose 1.2% to $1,276.10. (az)
Source: Newsmaker.id