Gold prices soared to a fresh record high on Tuesday in Mumbai, fueled by fears of a U.S. government shutdown and growing bets on more Federal Reserve interest rate cuts. The yellow metal has climbed 11.4% this September, setting up for its biggest monthly gain in 14 years—since a 15% jump back in August 2011, when investors rushed to gold as a safe haven.
In India, 24-carat gold hit Rs 1,15,450 per 10 grams, based on fresh data from the India Bullion and Jewellers Association (IBJA). Over in the U.S., December gold futures edged up 0.4% to $3,872 an ounce.
Tensions in Washington are adding to the buzz. U.S. President Donald Trump and Democratic leaders made no headway in a White House meeting to avoid a government shutdown. If it happens, it could start as early as Wednesday, throwing key services into chaos. The U.S. Labor Department even warned it would pause releasing economic data, like the crucial September jobs report, if its stats agency shuts down.
This uncertainty is boosting gold’s appeal as a safe-haven asset. At the same time, recent U.S. economic numbers have traders expecting the Federal Reserve to ease up more. According to CME Group’s FedWatch tool, there’s an 89% chance of a 25-basis-point rate cut at the Fed’s next meeting.
St. Louis Fed President Alberto Musalem struck a balanced note, saying he’s open to further cuts but the central bank needs to stay vigilant against inflation and keep rates from dropping too low.
Gold’s hot streak continues in India too. It has beaten Indian stock markets for the fourth straight Diwali-to-Diwali period, extending a pattern where the metal has outperformed equities in seven of the past eight years. Silver is shining bright as well, topping stocks for the third year in a row, thanks to strong industrial demand in areas like solar panels, semiconductors, and electric vehicles.
Bullion gets extra lift from heavy buying by central banks and steady cash flowing into gold ETFs. However, cautious comments from Fed Chair Jerome Powell on inflation, the job market, and future rate moves might limit how high prices climb.
Eyes are now on upcoming U.S. economic reports for clues about the economy’s direction, including job openings, private payrolls, the ISM manufacturing index, and Friday’s non-farm payrolls data.
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