Gold scales fresh global peak as US shutdown rattles investors

WASHINGTON: Gold prices touched new highs on Wednesday as global uncertainty pushed investors towards safe-haven assets, with both the US government shutdown and weak labour market data fuelling expectations of interest rate cuts by the Federal Reserve.

Spot gold climbed 0.1 percent to $3,861.99 per ounce by 0359 GMT, after briefly hitting an all-time high of $3,875.32. US gold futures for December delivery jumped 0.7 percent to $3,901.40.

The rally gained further strength as the dollar hovered near a one-week low, making gold cheaper for overseas buyers. Wall Street futures, meanwhile, slipped in early trade.

Political turmoil lifts bullion

Analysts said a mix of political uncertainty in Washington and concerns about the dollar’s weakness are fuelling the upward momentum.

“Gold is benefiting from concerns over a weaker dollar, the political situation with the standoff about a government shutdown in the US, and also general geopolitical uncertainty,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

Frappell added that the outlook remains bullish, with gold likely to cross $3,900 and potentially move towards $4,000 if the current conditions persist.

The US government shut down much of its operations this week as Congress and the White House failed to agree on a funding deal. The deadlock could delay key economic data releases, including the non-farm payrolls report due Friday.

Tuesday’s JOLTS report showed only marginal growth in job openings during August, coupled with a drop in hiring. Traders are now pricing in a 25-basis-point rate cut this month, followed by another in December.

Risks to the rally

While the sentiment is strong, some analysts warn that a sudden rise in the dollar, unexpected hawkish signals from the Fed, or major fiscal reforms could slow down gold’s rally.

“Potential risks to gold’s rally include an uptrend in the dollar, unexpected Fed policy shifts, and fiscal reforms in the United States,” said Michael Hsueh, precious metals analyst at Deutsche Bank.

Gold has gained more than 47 percent so far this year, thriving in an environment of low interest rates and growing political tensions worldwide.

Other precious metals

The rally extended to silver, which surged nearly 1 percent to $47.09 an ounce, its highest level in more than 14 years. Platinum slipped 0.2 percent to $1,570.85, while palladium fell 0.7 percent to $1,248.45.

Gold price in Pakistan

In Pakistan, the impact of the international surge has been swift and sharp. Prices climbed to yet another record on Tuesday, capping off September with the highest rates ever seen in the country.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold per tola was settled at Rs406,778 after a single-day increase of Rs3,178. The price of 10 grammes rose by Rs2,725 to Rs348,746.

This came just a day after gold had already breached the Rs400,000 mark, finishing Monday at Rs403,600 per tola following a dramatic Rs5,900 spike.

The pace of the rally has left traders, jewellers, and buyers stunned. Many expect prices to rise further in the coming days if the global trend continues, making gold both a lucrative investment and a growing challenge for ordinary consumers.

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