Gold prices extended a four-day rally on Wednesday, approaching record highs, as investors weighed the risk of a potential U.S. government shutdown, which could bolster demand for haven assets. The surge has propelled bullion to a more than 47% gain so far this year, on track for its largest annual increase since 1979, Bloomberg reported.
Spot gold was up 0.2% at $3,865.15 an ounce at 8:17 a.m. in Singapore, following a 0.7% gain on Tuesday. Bullion traded just under $10 shy of the peak set earlier this week, as markets monitored a standoff in Washington over federal funding. Failure by Democrats and Republicans to reach an agreement by the midnight deadline would trigger the first government shutdown in nearly seven years, potentially delaying key economic data, including Friday’s nonfarm payroll report.
The year’s rally has been supported by central-bank purchases and rising holdings in gold-backed exchange-traded funds (ETFs), with September marking the largest monthly ETF inflows in three years, according to data compiled by Bloomberg. The Federal Reserve’s recent interest-rate cuts have further reinforced investor demand for gold.
Fed officials have signaled a cautious approach to monetary policy amid mixed signals from the labor market. Boston Fed President Susan Collins suggested that further rate reductions may be warranted this year, while Fed Vice Chair Philip Jefferson highlighted a cooling labor market alongside persistent inflation pressures.
Other precious metals showed modest movements: silver rose 0.2% to $46.73 an ounce, platinum edged higher, and palladium remained largely unchanged. The Bloomberg Dollar Spot Index was flat.
U.S. equity futures were slightly lower in early Asian trading, reflecting market nerves over a potential shutdown. S&P 500 futures dipped as President Donald Trump warned of cutting favored programs and federal jobs if Congress fails to meet the funding deadline. The S&P 500 ended Tuesday 0.4% higher, capping its best September in 15 years, fueled by optimism around artificial intelligence and lower interest rates.
Asian stocks, meanwhile, posted gains for a sixth consecutive month in September, marking their longest monthly winning streak since 2018, though futures for Sydney and Tokyo pointed to modest losses. Markets in Hong Kong and China remain closed for extended holidays.
Traders expressed concern that a government shutdown could create an information vacuum, delaying crucial economic data that guide the Fed’s interest-rate decisions. “Things could get ugly if the shutdown creates an information vacuum for jobs and inflation data ahead of the next Fed rate decision,” said Michael Bailey of FBB Capital Partners.
Elsewhere, Bloomberg News reported that China’s state-run iron ore buyer has temporarily halted purchases from BHP Group, a move that could exacerbate pricing tensions in the global commodities market.
The market remains attentive to upcoming labor reports, ETF inflows, and central-bank commentary, which will influence the trajectory of gold and broader financial markets in the weeks ahead.
