Gold prices hold near record highs amid expectations of Fed rate cut and US government shutdown

Global gold prices are holding near record highs as markets factor in an almost guaranteed cut in the key interest rate by the US Federal Reserve and political uncertainty related to a partial shutdown of the US government. This is reported by Reuters, writes UNN.

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On October 2, the spot price of gold was $3,862.07 per ounce after the metal reached an all-time high of $3,895.09 the day before. Analysts attribute the sustained demand to deteriorating US employment data and the risk of delays in key economic publications due to the government "shutdown."

Weak ADP employment data ahead of the non-farm payrolls report revived Fed rate cut bets aimed at weakening the US dollar. Gold also rose due to the US government shutdown 

According to him, speculators and fund managers are holding "net long positions," indicating confidence in further growth, but the market is still far from overheating.

Chicago Fed President Austan Goolsbee, meanwhile, called for caution: inflationary risks force the regulator to balance between stimulating the economy and curbing prices. Despite this, the CME FedWatch tool shows that markets almost unanimously expect a 25 basis point rate cut as early as this month.

Gold prices hit record high amid US government shutdown01.10.25, 10:03 • 3951 view

Gold has historically been seen as a "safe haven" in times of instability. Goldman Sachs forecasts suggest that the price could reach $4,000 by mid-2026 and $4,300 per ounce by the end of the year. An additional growth factor is the activity of ETF funds: the world's largest SPDR Gold Trust reported an asset increase of 0.59% to 1,018.89 tons, which was the maximum since July 2022.

Thus, gold retains its role as a key capital protection tool, and uncertainty in US politics only pushes investors to new purchases.

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According to fintech expert and co-founder of Concord Fintech Solutions Olena Sosedka, such a rapid increase in the price of gold is just the tip of the iceberg.

$3,800 per ounce of gold is not just a record. It is a mirror of our world, which lives in a state of uncertainty and a crisis of trust. And when modern financial instruments look fragile, investors once again turn to the oldest symbol of stability – gold 

She added that the risk of a US government "shutdown," internal political squabbles in Washington, and expectations of Fed rate cuts forced capital to flee from stocks to a "safe haven."

According to Olena Sosedka, geopolitical tensions reinforce this movement.

In addition, the rising value of gold means that investors are preparing for a weakening dollar. This is primarily due to expectations of interest rate cuts by the Federal Reserve. The logic is simple – if the Fed begins to ease its policy, the yield on dollar bonds will fall, and gold will become more attractive. After all, it does not depreciate along with the currency.