By Anmol Choubey
(Reuters) -Gold prices touched an all-time high on Monday, soaring above $3,900-per-ounce level, as investors flocked to safe-haven bullion amid the U.S. government shutdown, broader economic uncertainty, and prospects of further Federal Reserve rate cuts.
Spot gold was up 1.2% at $3,932.40 per ounce, as of 0730 GMT, after hitting $3,944 earlier in the session.
U.S. gold futures for December delivery climbed 1.2% to $3,956.50.
Washington will start mass layoffs of federal workers if U.S. President Donald Trump decides negotiations with congressional Democrats to end a partial government shutdown are “absolutely going nowhere,” a senior White House official said on Sunday.
“There are concerns that (the U.S. government shutdown) could become protracted with a negative impact on U.S. growth,” said independent analyst Ross Norman, adding that a pervading sense of caution in financial markets helping gold.
Gold has climbed nearly 50% so far this year, underpinned by strong central bank buying, increased demand for gold-backed exchange-traded funds, a weaker dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.
This rally, characterised by low participation and primarily driven by central banks with a long-term outlook and steady investors rather than speculative buyers, indicates that any pullback might be milder than expected, Norman said, adding that this could present a buying opportunity on dips while the rally maintains its momentum.
Fed Governor Stephen Miran pressed for an aggressive rate-cut trajectory again on Friday, citing the impact of Trump administration’s economic policies.
Alternative data from both public and private sources indicate signs of weakness in the U.S. labor market amid the government shutdown.
Investors are now pricing in a 25-basis-point cut at the Fed meeting this month, with an additional 25 bp cut anticipated in December. [FEDWATCH]
“We see both fundamental and momentum-based reasons for gold to rally further, and now expect bullion to reach $4,200/oz by the end of this year,” UBS said in a note.
Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.
Spot gold broke the $3,000-per-ounce level for the first time in March.
Many brokerages have turned bullish on the rally.
Spot silver climbed 1.5% to $48.67 per ounce, hitting its highest level in more than 14 years. Platinum rose 0.7% to $1,616 and palladium gained 1.2% to $1,276.10.
(Reporting by Anmol Choubey in Bengaluru; Editing by Sherry Jacob-Phillips)
