Gold prices pushed higher during Asian trade on Tuesday, hovering near record levels as investors rushed to safety ahead of a possible partial United States government shutdown and growing expectations of a Federal Reserve rate cut next month.
Spot gold was up $35.22, or 0.9%, at $3,869.70 per ounce by 3:35 pm AEST (5:35 am GMT), bringing monthly gains to about 12% as the third quarter and September draw to a close. The rally has positioned bullion for its strongest monthly gain in 14 years.
U.S. Vice President JD Vance underscored the uncertainty on Monday, warning, “I think we’re headed to a shutdown,” after President Donald Trump and Democratic leaders failed to reach a budget deal in a White House meeting.
Without an agreement, government funding lapses after Tuesday’s midnight deadline.
The shutdown threat has weighed further on the U.S. dollar, even as the currency attempts to stabilise.
Investors are also increasingly confident that the Fed will cut interest rates in October, with CME Group FedWatch Tool showing a roughly 89.3% probability of easing.
St. Louis Fed President Alberto Musalem noted the central bank must remain cautious, saying he was open to further cuts but emphasised the need to keep policy tight enough to fight inflation.
Geopolitical tensions continue to bolster gold’s appeal as a traditional safe-haven. Conflicts between Israel and Hamas, as well as heightened friction between Russia and NATO nations, have amplified risk aversion.
Traders are also assessing the impact of new tariffs unveiled by Trump on Monday, which included 10% duties on timber and lumber imports and 25% levies on kitchen cabinets, vanities, and upholstered wood products.
Some measures will take effect from 14 October, with further increases scheduled for 1 January.
Looking ahead, concerns over the U.S. government shutdown are likely to limit downside risks for gold, especially as month- and quarter-end positioning intensifies.
A shutdown would also disrupt the release of key economic data, including Friday’s widely watched U.S. jobs report. The Labor Department confirmed on Monday that its statistical agencies would suspend reports if funding lapses.
