Gold Reaches New Peak as Interest Rate Cut Expectations and U.S. Shutdown Drive Demand

Highlights:

• Gold prices surged to a record high of around US$3,970 an ounce at the time of writing, nearing the US$4,000 milestone amid safe-haven demand.
• Expectations of a 0.25 percentage point U.S. Federal Reserve rate cut and uncertainty from the prolonged U.S. government shutdown boosted investor appetite for gold.
• Renewed inflows into gold-backed ETFs and steady central bank purchases further supported the precious metal’s rally.

Safe-Haven Buying Pushes Gold Higher

Gold prices surged to a new record, edging closer to US$4,000 an ounce, as investor demand for safe-haven assets intensified due to expectations of imminent U.S. interest rate cuts and ongoing uncertainty around the federal government shutdown. Spot gold climbed as high as US$3,970 an ounce at the time of writing, setting a fresh intraday peak in New York’s opening session. The rally extended gold’s streak of seven consecutive weekly gains, taking its price more than 50% higher so far this year.

Drivers of the Rally

Two main factors have underpinned gold’s rise:

1. U.S. Federal Reserve Policy: Market participants continue to expect a 0.25 percentage point interest rate reduction later this month. Lower rates typically support gold by reducing the appeal of interest-bearing assets.
2. Economic and Political Uncertainty: The prolonged U.S. government shutdown has delayed key economic data releases, clouding the outlook and boosting demand for assets viewed as safe stores of value.

Gold-backed exchange-traded funds (ETFs) have experienced fresh inflows, while sustained purchases by central banks have added further momentum to the rally.

Market Positioning Reflects Optimism

Options traders have increased bullish bets on gold, expecting further gains in the near term. Some shifted their positions into higher-strike call options, betting the metal could push beyond current highs.

Outlook Remains Upbeat but Volatile

Analysts suggest that if the Federal Reserve follows through with rate cuts and political uncertainty persists, gold may soon test the US$4,000 an ounce mark. However, a delay in rate cuts or a swift resolution of the government shutdown could limit the metal’s upside. The precious metal’s performance in the coming weeks will hinge on economic policy decisions and investor risk appetite.

Disclaimer for Kapitales Research

The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com