Gold prices hit fresh record highs in Asian trade on Tuesday, extending their strong rally from the past week. The surge came as investors grew increasingly concerned about a potential U.S. government shutdown.
Safe-haven demand also rose on persistent bets that the U.S. Federal Reserve will deliver more interest rate cuts this year. While gold rallied, silver and platinum eased slightly after sharp gains in the prior session. Copper prices also retreated.
Spot gold touched a record high of $3,865.73 an ounce, while gold futures peaked at $3,893.72. The precious metal was up nearly 17% in the third quarter, supported by strong haven flows.
Gold climbs on shutdown risk
Gold demand accelerated this week as markets feared U.S. lawmakers would fail to reach a deal to avoid a government shutdown. Congress has until midnight September 30 (0400 GMT Wednesday) to pass a spending bill.
Although a Republican-backed plan passed the House of Representatives, it faces hurdles in the Senate, where 60 votes are needed for approval. Talks with President Donald Trump on Monday failed to resolve disputes, mainly around healthcare and social spending.
A shutdown would not only disrupt economic activity but could also delay the release of September’s nonfarm payrolls report due Friday. The White House warned that thousands of federal workers could lose their jobs, further pressuring the labor market.
Metals head for strong Q3 on rate cut optimism
Beyond gold, metal markets saw profit-taking on Tuesday but remained on track for strong quarterly gains. Precious metals have benefited from Fed rate cuts and expectations of more easing ahead.
The U.S. central bank lowered rates by 25 basis points earlier this month and signaled the possibility of two more cuts this year, depending on inflation and jobs data. Markets still expect at least one more 25-basis-point cut in October, CME FedWatch data showed.
Lower interest rates weakened the dollar and boosted metals. Platinum was set to end the quarter up nearly 18%, while silver gained 30%, both hitting decade highs earlier this week.
Industrial metals also strengthened. London Metal Exchange copper futures held at $10,418.60 a ton, up 5% for the quarter. COMEX copper futures traded near $4.90 a pound, with an 11.4% quarterly gain.
