The US government shutdown boosted gold prices, pushing them up for the seventh consecutive week, with the market betting on prices above 4,000.
2025-10-04 06:26:51
Gold prices rose on Friday, hovering near an all-time high and heading for their seventh straight weekly gain, on growing concerns about the economic impact of a prolonged U.S. government shutdown and expectations of interest rate cuts.
Spot gold rose 0.7% to $3,884.19 per ounce, having hit a record high of $3,896.60 on Thursday. Gold prices rose over 3% this week. December U.S. gold futures settled up over 1% at $3,908.9 per ounce, bringing the year-to-date gain to over 47%.
On September 30th, the U.S. Senate failed to pass a new temporary appropriations bill before the federal government ran out of funds. At midnight Eastern Time on October 1st, the federal government shut down again after nearly seven years. In subsequent negotiations, Senate Democrats again blocked a seven-week temporary spending bill proposed by Republicans, which failed to pass by a vote of 54 to 44. Republicans control the Senate with a 53-47 majority, but Senate rules require 60 votes to advance the measure. This move effectively ensures that the government shutdown will continue into next week.
Due to the federal government shutdown, the Bureau of Labor Statistics was unable to release its monthly employment data report on the 3rd as planned. The Bureau of Labor Statistics, a subsidiary of the Department of Labor, is the nation's core statistical agency. During the shutdown, the Bureau of Labor Statistics halted both reporting and data collection. This impacted the release of several key statistics, including key inflation data such as the Consumer Price Index, originally scheduled for mid-October.
According to US media reports, the shutdown has also affected data collection at agencies such as the Census Bureau and the Bureau of Economic Analysis under the US Department of Commerce. Economic analysts believe that the US currently faces a complex economic situation characterized by weak employment and stubborn inflation, and the suspension of key statistical data will affect the Federal Reserve's judgment on whether the economy needs stimulus. Martha Gimbel, a former senior advisor to the White House Council of Economic Advisers during the Biden administration, said: "At such a critical time, the lack of data makes it more difficult to understand the economy."
Gregory Daco, chief economist at Ernst & Young, said it was dangerous to "fly blind in dense fog."
“I think the longer the shutdown goes on, the more of a steady bullish factor it will be for the gold market,” said Jim Wyckoff, senior analyst at Kitco Metals. “If they happen to unexpectedly reach a deal over the weekend to get the government reopened, that could be a bearish factor.”
The key U.S. non-farm payrolls report originally scheduled for Friday has been delayed, leaving investors to rely on other indicators to judge whether the labor market is cooling and maintain expectations of an imminent interest rate cut.
Investors are pricing in a 99% chance of a 25 basis point rate cut in October and an 85% probability of another cut in December, according to CME Group's FedWatch tool.
UBS said in a report that although gold prices may fall back in the short term after such a strong performance, they are currently expected to rise to $4,200 per ounce in the coming months. Falling real interest rates in the United States, further weakening of the US dollar, and continued political turmoil will push gold prices higher, causing the inflow of exchange-traded funds (ETFs) to be higher than the initial forecast, reaching about 830 metric tons for the whole year. It is expected that central bank demand for gold will still be 900-950 metric tons in 2025. The bank continues to be bullish on gold in global asset allocation and maintains its attractive rating.
China is in the midst of its Golden Week holiday, which typically slows global demand for physical gold. However, Ole Hansen of Saxo Bank said the US government shutdown has injected new demand for the precious metal as a safe hedge. "Physical gold demand tends to weaken during China's Golden Week holiday, and there is usually a risk of a pullback, but that risk has not yet materialized," Hansen said in a report.
Three members of Goldman Sachs' commodities research team said in a report that upside risks to their 2026 gold price forecast have intensified, citing two factors. They cited speculative positioning as a source of volatility around the rational value anchored by slower-moving ETFs and central banks. Another factor was "significantly stronger-than-expected performance in Western ETF holdings in September, exceeding our model's projections based on falling US interest rates."
That suggests the key upside risks to Goldman Sachs' gold price forecasts, which members have been warning about - $4,000 an ounce by mid-2026 and $4,300 by December 2026 - now appear to be materializing.
Spot gold rose 0.7% to $3,884.19 per ounce, having hit a record high of $3,896.60 on Thursday. Gold prices rose over 3% this week. December U.S. gold futures settled up over 1% at $3,908.9 per ounce, bringing the year-to-date gain to over 47%.
On September 30th, the U.S. Senate failed to pass a new temporary appropriations bill before the federal government ran out of funds. At midnight Eastern Time on October 1st, the federal government shut down again after nearly seven years. In subsequent negotiations, Senate Democrats again blocked a seven-week temporary spending bill proposed by Republicans, which failed to pass by a vote of 54 to 44. Republicans control the Senate with a 53-47 majority, but Senate rules require 60 votes to advance the measure. This move effectively ensures that the government shutdown will continue into next week.
Due to the federal government shutdown, the Bureau of Labor Statistics was unable to release its monthly employment data report on the 3rd as planned. The Bureau of Labor Statistics, a subsidiary of the Department of Labor, is the nation's core statistical agency. During the shutdown, the Bureau of Labor Statistics halted both reporting and data collection. This impacted the release of several key statistics, including key inflation data such as the Consumer Price Index, originally scheduled for mid-October.
According to US media reports, the shutdown has also affected data collection at agencies such as the Census Bureau and the Bureau of Economic Analysis under the US Department of Commerce. Economic analysts believe that the US currently faces a complex economic situation characterized by weak employment and stubborn inflation, and the suspension of key statistical data will affect the Federal Reserve's judgment on whether the economy needs stimulus. Martha Gimbel, a former senior advisor to the White House Council of Economic Advisers during the Biden administration, said: "At such a critical time, the lack of data makes it more difficult to understand the economy."
Gregory Daco, chief economist at Ernst & Young, said it was dangerous to "fly blind in dense fog."
“I think the longer the shutdown goes on, the more of a steady bullish factor it will be for the gold market,” said Jim Wyckoff, senior analyst at Kitco Metals. “If they happen to unexpectedly reach a deal over the weekend to get the government reopened, that could be a bearish factor.”
The key U.S. non-farm payrolls report originally scheduled for Friday has been delayed, leaving investors to rely on other indicators to judge whether the labor market is cooling and maintain expectations of an imminent interest rate cut.
Investors are pricing in a 99% chance of a 25 basis point rate cut in October and an 85% probability of another cut in December, according to CME Group's FedWatch tool.
UBS said in a report that although gold prices may fall back in the short term after such a strong performance, they are currently expected to rise to $4,200 per ounce in the coming months. Falling real interest rates in the United States, further weakening of the US dollar, and continued political turmoil will push gold prices higher, causing the inflow of exchange-traded funds (ETFs) to be higher than the initial forecast, reaching about 830 metric tons for the whole year. It is expected that central bank demand for gold will still be 900-950 metric tons in 2025. The bank continues to be bullish on gold in global asset allocation and maintains its attractive rating.
China is in the midst of its Golden Week holiday, which typically slows global demand for physical gold. However, Ole Hansen of Saxo Bank said the US government shutdown has injected new demand for the precious metal as a safe hedge. "Physical gold demand tends to weaken during China's Golden Week holiday, and there is usually a risk of a pullback, but that risk has not yet materialized," Hansen said in a report.
Three members of Goldman Sachs' commodities research team said in a report that upside risks to their 2026 gold price forecast have intensified, citing two factors. They cited speculative positioning as a source of volatility around the rational value anchored by slower-moving ETFs and central banks. Another factor was "significantly stronger-than-expected performance in Western ETF holdings in September, exceeding our model's projections based on falling US interest rates."
That suggests the key upside risks to Goldman Sachs' gold price forecasts, which members have been warning about - $4,000 an ounce by mid-2026 and $4,300 by December 2026 - now appear to be materializing.
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