Record Run Continues: Gold Closes in on $4,000 Mark Amid U.S. Shutdown and Monetary Uncertainty

Gold prices opened the week with strong upward momentum, reaching a new all-time high as the continuing U.S. federal government shutdown deepened uncertainty over the economic outlook. The precious metal, long viewed as a reliable safe-haven asset, climbed to about $3,920.63 per ounce, coming close to the key $4,000 mark before retreating modestly later in the session. The suspension of many federal operations has clouded visibility for investors, particularly because it postponed critical releases such as the U.S. non-farm payrolls report that was expected on October 3.

With official data unavailable, investors have turned to private-sector surveys and forecasts to assess the state of the economy—an environment that complicates the Federal Reserve’s decision-making process on interest rates. Even so, market participants in the rates and futures markets continue to price in a 0.25-percentage-point cut before the end of October, a move that would generally support gold, which offers no yield and tends to benefit when borrowing costs decline.

So far this year, bullion has gained nearly 50%, marking one of its strongest annual performances in decades. Several factors have contributed to this extraordinary rally: persistent geopolitical tensions, the Fed’s easing cycle, and steady central-bank diversification away from the U.S. dollar. As of 8:45 a.m. Singapore time, spot gold was trading near $3,905.54 per ounce, up 0.5% on the day and on track for its seventh consecutive weekly increase. The Bloomberg Dollar Spot Index edged higher by 0.3%, while silver, platinum, and palladium all advanced alongside gold.

Market strategists remain generally constructive on gold’s medium-term outlook, pointing to softening labor-market indicators and an expected continuation of Fed rate cuts. However, analysts at Pepperstone Group cautioned that, although the rally remains fundamentally supported, the risk-to-reward balance could be shifting—suggesting a short-term pullback might help sustain the longer-term trend.

Broader market sentiment reflected the same mix of caution and volatility. The S&P 500 initially managed a modest gain of 0.34% on the first trading day of the shutdown, while the VIX volatility index rose 0.45%, signaling increased investor unease. Economists estimate that every week of federal closure could trim U.S. GDP growth by roughly 0.1%, underlining the potential drag on near-term activity. Against that backdrop, gold’s role as a hedge against political friction, global instability, and inflationary pressures has strengthened. The University of Michigan’s September 2025 survey showed inflation expectations climbing to 4.7%, reinforcing demand for tangible assets.

Investment banks maintain an optimistic longer-term view. J.P. Morgan Research, for instance, expects gold to average around $3,675 per ounce in the fourth quarter of 2025, with the possibility of touching $4,000 per ounce by mid-2026. Meanwhile, central banks worldwide have continued adding record amounts of gold to their reserves this year, reflecting a broad strategic move toward non-dollar assets amid heightened global uncertainty.