gold is experiencing a sustained rally, reaching near-record levels amid ongoing geopolitical and economic uncertainties. The precious metal has increased by approximately 12% over September, marking its strongest monthly performance in over a decade. Investor sentiment is driven primarily by concerns surrounding a potential partial government shutdown in the United States, combined with expectations of a future Federal Reserve interest rate cut.
The looming U.S. government shutdown, with a deadline set for Tuesday midnight, has heightened fears of fiscal instability. This uncertainty has placed downward pressure on the U.S. dollar, bolstering gold ’s appeal as a safe-haven asset. Meanwhile, market participants are increasingly betting on the Fed easing monetary policy next month, with a near 90% probability reflected in current futures pricing. Policymakers remain cautious, emphasizing the importance of maintaining rates high enough to control inflation, even as some advocate for further cuts.
Geopolitical tensions continue to underpin demand for gold , with ongoing conflicts between Israel and Hamas, as well as tensions involving Russia and NATO nations, contributing to risk aversion among investors. Additionally, recent trade measures introduced by the U.S., including tariffs on softwood timber and certain wood products, serve as further catalysts for safe-haven buying.
Economic indicators from China have also supported gold ’s rally. Better-than-expected manufacturing data from China, the world’s leading consumer of the metal, bolstered positive sentiment. Despite a slight slowdown in non-manufacturing activity, manufacturing PMI readings pointed to an ongoing recovery, maintaining gold ’s appeal amid global growth concerns.
Looking forward, the potential for a partial U.S. government shutdown may continue to support gold prices, especially as market participants await crucial U.S. labor market data. With the U.S. Labor Department signaling that it may withhold key employment figures during a shutdown, traders remain cautious. Technical momentum indicates a possible correction, but critical levels above $3,850 on a closing basis will be essential for sustained upside. A pullback, if it occurs, could see prices testing support around $3,800 or lower.
Overall, gold remains a key asset during turbulent times, driven by macroeconomic fears, geopolitical tensions, and shifting monetary policies. Central banks continue to diversify their reserves, with many from emerging markets increasing their gold holdings significantly, further supporting the metal’s status as a trusted store of value.
