Gold Prices Surge to All-Time High

(MENAFN) Gold prices surged to an all-time high on Wednesday, climbing 0.9% to reach $3,895.33 by 0830 GMT, as political deadlock in Washington led to a U.S. government shutdown. The standoff between President Donald Trump and congressional Democrats over budget negotiations failed to yield an agreement, triggering the closure.

Over the past year, gold traded between $2,536.91 and $3,819.80, marking a 45.9% increase during that period, as investors sought safety amid escalating risks.

Although a government shutdown does not inherently spark a full-scale economic downturn, it significantly hampers day-to-day operations across the country. Thousands of federal employees now face furloughs or are required to continue working without pay, depending on agency-specific contingency plans that determine who is considered essential personnel.

The shutdown will also halt the release of essential economic reports. The Bureau of Labor Statistics has announced that economic data will not be published during the government closure, causing delays in key indicators like non-farm payrolls, initial jobless claims, and inflation statistics.

Beyond the shutdown, the upward momentum in gold has been fueled by a mix of geopolitical instability, global economic uncertainty, increased gold buying by central banks, and an ongoing rate cut cycle from the Federal Reserve.

Responding to pressure from President Donald Trump, the Fed lowered its policy rate by 25 basis points last week.

Markets are now pricing in further easing at the Fed’s upcoming October and December meetings.

Driving the Fed’s more accommodative approach are sluggish inflation, rising unemployment, and intensifying political pressure. Analysts point to these economic indicators—along with President Trump’s influence—as key factors behind the central bank’s decision to cut rates.

MENAFN01102025000045017169ID1110134680