Gold Soars As Concerns Of A Prolonged Shutdown Surface

(RTTNews) - Gold prices surged on Monday as concerns about the consequences of a prolonged U.S. government shutdown on the economy boosted the previous metal.

Front Month Comex Gold for October delivery soared by $67.70 (or 1.74%) to $3,948.50 per troy ounce. Notably, this is a new record high for gold.

Front Month Comex Silver for October delivery also rose sharply by 48.50 cents (or 1.02%) to $48.082 per troy ounce.

Intense discussions for passing a short-term funding bill to approve government spending did not succeed last week, as Democrats want to extend Obamacare subsidies to which the Republicans disagreed, and eventually, the U.S. government shut down on October 1.

As a result, roughly around 2 million federal workers are losing their pay and 750,000 have been furloughed. U.S. President Donald Trump is preparing to utilize this shutdown to enforce mass layoffs across various federal departments.

Important macroeconomic data coming from the U.S. have been halted. The Producer Price index, nonfarm payroll, and unemployment figures are not to be seen through October 16. Economists fear that the shutdown will last longer than expected.

The shutdown has reinforced bets on an additional rate cut by the U.S. Federal Reserve this October.

As uncertainty prevails, investors drifted to the safe-haven metal. Notably, gold has seen a near 50% rally in 2025.

In Europe, Ukraine' President Volodymyr Zelenskyy stated that Russia launched more than 50 missiles and 500 drones targeting nine regions in Ukraine this weekend and remarked that there is "zero real reaction from the world. Zelenskyy had earlier requested Tomahawk missiles from the U.S. to which the U.S. is yet to categorically respond.

In the Middle East, Israel and the Palestinian Hamas group are negotiating today. The discussions have kindled expectations for a ceasefire. Trump, who proposed the Gaza Peace Plan, urged both sides to "move fast" and warned that a failure may lead to "massive bloodshed."

Meanwhile, in France, Prime Minister Sebastien Lecornu resigned within hours of creating his new cabinet, in Japan, the ruling Liberal Democratic Party elected a conservative lawmaker Sanae Takaichi as the new Prime Minister.

On the monetary front, the U.S. Fed is working to balance interest rates amid a slowing economy with stubborn inflation (at 2.9%), weakening job market (4.3% unemployment in August), along with fresh concerns about the effects of a lasting shutdown on the economy.

According to CME Group's FedWatch Tool, investors are betting on 94.6% chances of a 25-basis-point interest rate cut in the October 28-29 Federal Reserve's meeting.

Market is pricing in that the U.S. Fed Chair Jerome Powell will attach priority to jobs over inflation and hence US dollar could become weaker, and this is driving up the yellow metal.