Gold surged to unprecedented levels at the start of the week’s Asian trading session, surpassing the $3,900 per ounce mark, supported by a sharp weakening in the Japanese yen and growing expectations that the U.S. Federal Reserve will continue cutting interest rates in the coming period. This strong rally came amid ongoing political and economic uncertainty in the United States, as the government shutdown persists and congressional negotiations over the spending bill remain stalled pushing investors further toward safe-haven assets.
Political developments within the U.S. added further ambiguity after President Donald Trump ordered the deployment of the National Guard in California and Portland, Oregon a move that sparked local opposition and legal disputes, heightening tensions in financial markets.
Meanwhile, currency markets witnessed sharp volatility, as the Japanese yen dropped significantly following the victory of conservative politician Sanae Takaichi in the Liberal Democratic Party leadership race, paving the way for her to become Prime Minister. Takaichi is known for her dovish monetary stance and opposition to further tightening by the Bank of Japan, which pushed the yen to new lows against the dollar, with USD/JPY climbing to around 149.6.
This decline eroded the yen’s appeal as a safe-haven asset, prompting many investors to shift toward gold, which continued its steady gains. Spot gold rose about 1% to $3,926.6 per ounce, while December futures climbed to $3,951.3 per ounce both marking new all-time highs.
The metal’s strong performance comes as markets increasingly bet on another Fed rate cut in October, following a 25-basis-point reduction in September. CME FedWatch data showed markets are now pricing in near certainty of further monetary easing, bolstering buying momentum for gold and other precious metals.
Silver and platinum also posted notable gains, with platinum rising to $1,627 per ounce and silver advancing to $48.29 per ounce. Industrial metals were relatively stable; copper edged up slightly to $10,731 per ton on the London Metal Exchange, while Comex copper futures eased to $5.09 per pound.
Despite improved risk appetite in U.S. markets, the ongoing government shutdown continues to weigh on economic confidence, especially as delays in passing the spending bill have left many federal employees furloughed. Prolonged disruption could directly impact economic activity and the labor market, increasing the likelihood of slower growth in the final quarter of the year.
Overall, the current political and economic climate remains supportive of sustained demand for gold as a safe-haven asset particularly amid yen weakness, expectations of further U.S. monetary easing, and persistent uncertainty surrounding Washington’s fiscal outlook. The current outlook suggests that gold may continue its upward trend in the short term, as both geopolitical and monetary factors remain in its favor.
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