Gold Soars to Record Level Amid U.S. Government Shutdown and Rising Economic Fears

SadaNews Economy - The price of gold continued its gains to record a new all-time high, extending a rally for the fourth consecutive day, in light of a government shutdown in the United States that could boost demand for safe-haven assets.

Gold in the spot market rose to touch $3,875.53 per ounce, surpassing Tuesday’s peak, while investors are anticipating the repercussions of the government shutdown in Washington. Democrats and Republicans failed to reach an agreement before midnight to fund federal operations, leading to the first government shutdown in nearly seven years, a scenario that could delay the release of critical data, such as the non-farm payroll report on Friday.

Gold has soared more than 47% since the beginning of the year, placing it on track for the largest annual gains since 1979. This surge has been fueled by increased purchases by central banks and rising holdings in gold-backed exchange-traded funds, coinciding with the Federal Reserve resuming interest rate cuts. According to data compiled by Bloomberg, fund flows in September reached their highest level in three years.

Susan Collins, President of the Federal Reserve Bank of Boston, stated on Tuesday that further interest rate cuts may be appropriate this year, considering the weak labor market, but she warned of persistent inflationary pressures.

For his part, Philip Jefferson, Vice Chair of the Federal Reserve, noted that the central bank faces dual challenges of a slowing labor market and rising inflationary pressures, complicating the outlook for future monetary policy direction.

Silver prices recorded a rise of 1.7% to $47.4317 per ounce, after falling by 0.6% in the previous session. Both platinum and palladium also increased.