Gold prices continued to rise following a five-day rally, reaching new highs amid concerns over a US government shutdown and expectations of Federal Reserve interest-rate cuts spurred by weak private payroll data. The precious metal was trading near $3,880 per ounce, only about $15 shy of its peak set earlier in the week. The shutdown has created uncertainty regarding essential economic data needed for Fed decision-making, increasing reliance on non-government reports such as the ADP Research print, which indicated a steep decline in private-sector payrolls for September.
Non-farm payroll data, originally scheduled for Friday, will also be delayed due to the government closure, which could put additional pressure on the US dollar. Given the potential for the Fed to implement two more rate cuts this year to counter a weakening labor market, investors have increased their bets. Lower interest rates typically boost non-yielding gold, making it more attractive, particularly as the dollar softens.
Gold has surged 48% this year, positioning it for its largest annual gain since 1979. This rally has been bolstered by central-bank purchases and increased investments in gold-backed exchange-traded funds (ETFs), coinciding with the Fed’s resumed rate cuts. According to data from Bloomberg, monthly ETF inflows in September were the highest in three years, with a notable increase in Chinese buying of gold-backed funds, following a period of subdued demand.
In other news, the US Supreme Court recently declined President Donald Trump’s request to remove Fed Governor Lisa Cook amid her ongoing lawsuit to retain her position. This ruling could mitigate concerns over potential encroachments on Fed independence, possibly cooling the demand for safe-haven assets like gold.
As of 12:22 p.m. London time, spot gold had increased by 0.5% to $3,884.75 per ounce. The Bloomberg Dollar Spot Index fell by 0.1%. Additionally, silver prices saw a slight increase, having reached a 14-year high earlier in the week, while both platinum and palladium also recorded gains.
More stories are available on bloomberg.com.
Published on October 2, 2025.
