Gold hits record as US shutdown looms

September 30, 2025 / 12:00 PM

Sharjah24 - AFP: Gold prices soared to another all-time high on Tuesday, climbing above $3,871 and edging closer to the $4,000 milestone. The precious metal has surged nearly 50 percent since the beginning of the year, supported by investor anxiety and expectations of further Federal Reserve interest rate cuts. Analysts note that gold has become the “star performer” in trading rooms, reflecting political and policy uncertainty rather than jewelry demand.

Market Reactions Across Asia and Europe

Equity markets delivered mixed results. Hong Kong, Shanghai, Taipei, Singapore, Mumbai, and Wellington registered gains, while Tokyo, Sydney, Seoul, Manila, Bangkok, and Jakarta struggled. In Europe, London opened lower alongside Paris and Frankfurt. Meanwhile, Zijin Gold International—an international spin-off of China’s largest miner—skyrocketed almost 70 percent on debut, buoyed by surging global demand for the metal.

US Political Deadlock Raises Fears

Concerns over a looming US government shutdown weighed heavily on sentiment. Republicans and Democrats remain at an impasse over funding, with top Democrat Chuck Schumer citing “large differences” and Vice President JD Vance accusing Democrats of putting “a gun to the American people’s head.” Analysts warned that unlike past shutdowns, this one could drag on due to deep political divisions, potentially inflicting severe damage on stocks and economic confidence.

Federal Reserve Outlook

Investor optimism has been partly sustained by expectations of two more rate cuts this year, following the Fed’s first move since December. Key labour market data—including job openings, private hiring, and non-farm payrolls—are expected this week, with forecasts indicating a continued slowdown. A prolonged shutdown, however, could delay the release of these critical figures, complicating the Fed’s policy decisions.

Broader Economic Risks

Experts caution that the combination of political instability, threatened mass federal layoffs, and shifting economic policies raises the risk of recession. Neil Wilson of Saxo Markets highlighted that while shutdowns are typically short and limited in impact, the 35-day shutdown of 2018–2019 saw the S&P 500 tumble 14 percent. This time, the fallout could be more severe.

Oil Prices Slide

Adding to market jitters, oil prices extended Monday’s three percent plunge on fears of oversupply. Speculation is mounting that OPEC+ could raise output again in November, deepening concerns of a glut in the market.