Gold Heading Toward Best Month Since 2009 As US Shutdown Threat Looms

Gold prices were headed for their best monthly gain in 16 years on growing concerns over a U.S. government shutdown and optimism surrounding a potential rate cut by the U.S. Federal Reserve.

Spot gold prices rose 1% to $3,871.72 per ounce, another fresh record. Retail sentiment on Stocktwits about SPDR Gold Shares ETF (GLD) was in the 'bullish' territory at the time of writing.

Gold's rally this week has been driven by growing concerns that the U.S. government will shut down by Wednesday unless Congress approves a temporary funding bill. The yellow metal has gained over 12% this month, on track for the most significant gains since November 2009.

"I think we're headed to a shutdown because the Democrats won't do the right thing," Vice President JD Vance told reporters after a meeting at the White House with senior members of Congress. The Democrats are pushing to keep healthcare subsidies for low and middle-income households in the stopgap funding measure.

“While gold appears overbought, the supportive backdrop is likely to limit any correction,” IG Bank analyst Tony Sycamore said, noting the importance of increased safe-haven demand driven by rising geopolitical tensions in Europe, concerns over the Fed's independence, and robust buying from central banks and private investors.

The shutdown could also delay the crucial jobs data due later this week. Another weak employment report could bolster the chances of more rate cuts by the Federal Reserve, which is positive for gold, a commodity denominated in dollars and therefore shares an inverse relationship with the greenback.

According to CME Group's FedWatch tool, traders have priced in a 25-basis-point cut in benchmark interest rates in the Federal Reserve's next policymaker meeting.

“We're in the early stages of a monetary reset as central banks move off the dollar standard and back to gold. This shift will end U.S. dollar hegemony, raising our interest rates and consumer prices while lowering our standard of living,” economist and famous gold bull Peter Schiff said on X.

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