Gold surged to a record $3,957 per ounce on Monday, driven by growing investor demand for a safe-haven amid the extended US government shutdown.
Over the past month, gold has climbed nearly 9%, and it is up almost 50% compared with the same time last year, marking one of the strongest rallies in recent history.
The US government shutdown, now entering a second week, has delayed key economic reports, including September’s non-farm payrolls data that normally shows how the job market is performing.
With this information on hold, traders are relying on alternative signals to assess the economy, which has heightened expectations that the Federal Reserve will cut interest rates in the coming months.
Markets currently price in about a 95% probability of a 25-basis-point cut in October and an 84% chance of another cut in December.
Gold is typically attractive during times of economic and geopolitical uncertainty because it acts as a safe-haven, preserving value when other investments become risky.
Unlike stocks or bonds, gold does not pay interest or dividends, so its appeal rises when interest rates fall or are expected to fall, as investors look for stability and a store of value.
The precious metal briefly touched $3,958.62 per ounce, just shy of its all-time high, before settling slightly lower.
Analysts expect markets to continue closely watching upcoming remarks from Federal Reserve officials for signals on future rate adjustments, which could further influence gold prices.
