Gold Prices Extend Rally as US Shutdown Deal Fuels Rate Cut Expectations

Highlights:

• Gold hovered near US$4,140 an ounce at the time of writing, after its biggest one-day jump since May.
• Market optimism followed a bipartisan deal to end the longest US government shutdown, boosting rate-cut expectations.
• Safe-haven demand strengthened amid talk of stimulus cheques and concerns over inflation and currency stability.

Shares of SPDR Gold Shares (NYSE: GLD) moved higher at the time of writing, as gold prices continued to climb, building on their largest single-day rally since May. Spot gold traded near US$4,140 an ounce, after gaining almost 2.9% in the previous session, as markets reacted to a breakthrough political deal expected to end the longest US government shutdown in history.

Shutdown Deal Reopens Data Pipeline

A bipartisan agreement, backed by US President Donald Trump, is anticipated to pass the Senate shortly, enabling federal operations to restart. The reopening will lead to the release of several delayed economic indicators, which investors expect will reflect slowing economic momentum.

Weaker upcoming data is likely to strengthen the case for further monetary policy easing by central banks. Such conditions tend to benefit gold, which becomes more attractive when interest-bearing assets offer lower returns.

Safe-Haven Demand Remains Strong

Gold's rise was also supported by renewed safe-haven interest after Trump floated the idea of sending cheques of at least US$2,000 per person as part of a so-called tariff dividend. Analysts noted that such stimulus measures recall the pandemic-era cash payments, which were criticised for contributing to elevated inflation.

Higher inflation and concerns around currency value historically boost gold demand, reinforcing its reputation as a store of wealth in uncertain conditions.

Outlook: Strong Annual Performance Continues

Despite easing from last month’s record high above US$4,380 an ounce, gold remains on track for its strongest annual gain since 1979, rising more than 55% year-to-date, supported by central bank buying and heavy ETF inflows.

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