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

Spot gold rose 1.4% to $3,940.04 an ounce, as of 11:08 GMT, after reaching $3,949.34 earlier in the session. US gold futures for December delivery rose 1.4% to $3,964.50.

Washington will begin mass layoffs of federal workers 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.

"Interest in gold remains strongly stimulated by the ongoing US government shutdown," said Lukman Otunuga, senior research analyst at FXTM. "There may be some fear-of-missing-out (FOMO) buying at current prices, but for others, there's likely a sense that the financial savior has sailed," said independent analyst Ross Norman.

Gold has risen nearly 50% so far this year, supported by strong buying by central banks, 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.

Alternative data from public and private sources show 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 both fundamental and momentum reasons driving gold to rally further, and now expect bullion to reach $4,200/oz by the end of this year," UBS said in a note. Non-yielding gold thrives in low-interest-rate environments and during times of economic uncertainty.

Spot gold prices broke through $3,000 per oz for the first time in March. Many brokers are optimistic about this rally. Spot silver prices rose 1.2% to $48.53 per oz, reaching their highest level in more than 14 years. Platinum rose 0.6% to $1,615.45, and palladium rose 1.6% to $1,280.75. (alg)

Source: Reuters