Spot Gold rose to a fresh all-time high of $3,945.05/oz. on Monday, supported by expectations of more Federal Reserve rate cuts, concerns over the impact of the US government shutdown and a drop in the Japanese Yen, which heightened the safe-haven allure of the metal.
The Japanese Yen plunged against the greenback after Sanae Takaichi, a fiscal dove, was elected to become the next Prime Minister.
“Yen weakness on the back of the Japanese LDP elections has left investors with one less safe-haven asset to go to, and gold was able to capitalise,” KCM Trade Chief Market Analyst Tim Waterer was quoted as saying by Reuters.
At the same time, the ongoing US government shutdown hampered public economic activity, risked job cuts and delayed crucial economic data, including the Non-Farm Payrolls report, ahead of the upcoming Federal Reserve policy meeting.
“The enduring U.S. government shutdown means that a cloud of uncertainty still hangs over the U.S. economy, and the potential size of any GDP impact,” Waterer added.
Markets are now pricing in about a 96% chance of a 25 basis point Fed rate cut in October and an 84% chance of another 25 bps cut in December.
Last week, Fed Governor Stephen Miran once again expressed support for an aggressive rate cut trajectory because of the impact of the Trump administration’s economic policies.
Spot Gold was last up 1.25% on the day to trade at $3,934.89 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 49.94%.
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