Gold prices soared to fresh record highs in Asian trade on Tuesday, extending a strong rally driven by growing concerns over a possible U.S. government shutdown and expectations of further interest rate cuts by the Federal Reserve. Spot gold surged to $3,865.73 per ounce, while gold futures touched $3,893.72, marking an impressive 17% gain in the third quarter.
Investor demand for safe-haven assets intensified as political gridlock in Washington fueled uncertainty. Lawmakers have until midnight on September 30 to pass a spending bill and prevent the closure of federal institutions. While a Republican-backed bill cleared the House of Representatives, it faces obstacles in the Senate, where 60 votes are required despite the party’s 53-seat majority. Disputes over healthcare and social welfare spending remain at the heart of the deadlock, with bipartisan talks failing to resolve the impasse.
A government shutdown could significantly disrupt economic activity, delay key economic data releases like September’s nonfarm payrolls, and lead to job losses across federal agencies. The White House has already warned of potential layoffs, further amplifying labor market risks.
Beyond gold, other precious and industrial metals saw mixed performance. Platinum gained nearly 18% in the third quarter, while silver rallied around 30%, both reaching decade-high levels earlier this week. However, both metals pulled back slightly on Tuesday. Copper prices also eased, with London futures steady at $10,418.60 per ton and COMEX copper at $4.9 per pound, still recording quarterly gains of 5% and 11.4% respectively.
Supporting metals markets, the Federal Reserve cut rates by 25 basis points earlier this month and signaled the possibility of additional cuts depending on inflation and labor market trends. Markets are betting on at least one more cut in October, a factor that has weakened the dollar and further boosted demand for commodities.