Gold hits record high as US Government shutdown begins

Gold prices surged to a record high on Wednesday, October 1, as Wall Street futures slipped and the dollar weakened, following the shutdown of the US government after lawmakers failed to agree on a funding deal. While the deadlock weighed on US markets, most Asian and European bourses managed to edge higher.

The closure, which began after the fiscal year ended on Tuesday, September 30, is the result of Democrats and Republicans failing to compromise on a temporary spending measure. Senate Republicans attempted to fast-track a House-passed bill, but were unable to secure the Democratic votes needed to send it to President Donald Trump for approval.

Democrats are demanding the restoration of hundreds of billions of dollars in healthcare funding for low-income households, which the Trump administration intends to cut. The stalemate has triggered the suspension of non-essential federal operations, leaving hundreds of thousands of civil servants without pay and raising concerns over disruptions to social safety net payments.

At a White House event, Trump threatened that the stoppage would hit Democrats hardest, saying: “So we’d be laying off a lot of people that are going to be very affected. And they’re Democrats, they’re going to be Democrats. We’ll use the pause to get rid of a lot of things we didn’t want, and they’d be Democrat things.”

Republican House Speaker Mike Johnson accused the opposition of responsibility, posting on X: “Democrats have officially voted to CLOSE the government.”

Democratic leaders Chuck Schumer and Hakeem Jeffries countered in a joint statement, saying their party was “ready to find a bipartisan path forward to reopen the government in a way that lowers costs and addresses the Republican healthcare crisis.”

Investors fear the shutdown could delay the release of key economic data, including Friday’s non-farm payrolls report, a critical gauge for the Federal Reserve’s next rate decision.

Safe-haven gold reached an unprecedented $3,875.53 per ounce on the back of the shutdown, a weaker dollar, and expectations of lower borrowing costs. Futures contracts for all three major New York indexes were lower, with the Dow retreating from a record high.

Asian markets largely shrugged off the turmoil, with Singapore, Seoul, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta all trading in positive territory alongside London. Tokyo, Paris and Frankfurt slipped, while Sydney ended flat. Hong Kong and Shanghai remained shut for holidays.

Currency markets reflected the uncertainty, with the dollar falling against major peers. The euro rose to $1.1768, while the yen strengthened slightly to 147.21 per dollar. The pound dipped to $1.3468. India’s rupee gained marginally after the central bank kept interest rates steady, though it remained near record lows amid trade and tariff concerns with Washington.

In commodities, US benchmark WTI crude rose 0.4 percent to $62.59 per barrel, while Brent gained the same margin to $66.28.

Meanwhile, Australian mining giant BHP slid 2.5 percent after reports that China had instructed steelmakers to halt purchases of dollar-denominated seaborne cargoes from the company in a pricing dispute.