(MENAFN) Gold surged to an unprecedented level on Monday, climbing more than 1.1% to reach a record-breaking $3,945.12 at 0500GMT, as growing political turbulence in Washington rattled markets and fueled speculation that the Federal Reserve may soon slash interest rates again.

By 0620GMT, the precious metal had slightly eased to $3,926.40, but remained firmly elevated after breaching its all-time high.

Over the past year, gold has traded between $2,536.91 and its latest peak, marking a 48% gain across 12 months — a striking rise driven by mounting economic unease and heightened demand from central banks.

A potential U.S. federal government shutdown has only intensified investor anxiety. While not immediately catastrophic, the paralysis of government functions sends ripples through key sectors and delays crucial data releases, muddying the economic outlook of the world’s largest economy.

During such shutdowns, federal agencies enact contingency plans to determine which personnel are “essential.” Many government employees will either continue working without compensation or be placed on unpaid leave until Congress approves a new budget.

One significant consequence: the suspension of major economic indicators. Under the Bureau of Labor Statistics’ emergency protocol, figures like non-farm payrolls, initial jobless claims, and inflation data will not be published during the shutdown.

The metal’s rally hasn’t been fueled by domestic gridlock alone. A broader cocktail of drivers — from geopolitical uncertainty and global economic slowdown to soaring central bank demand and a dovish monetary policy outlook — has fortified gold’s ascent.

Just last week, under pressure from President Donald Trump, the Federal Reserve trimmed its policy rate by 25 basis points. The move has reinforced expectations of further rate reductions in the October and December meetings.

Markets are now closely watching incoming inflation and labor figures — if released — as well as the president’s continued influence on monetary policy. With soft price growth and rising joblessness already in play, traders are bracing for deeper rate cuts.

Last week, the Federal Reserve lowered its policy rate by 25 basis points, a move widely seen as influenced by pressure from US President Donald Trump.

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