Gold Holds Steady as U.S. Government Shutdown and Softer Dollar Support Safe‑Haven Appeal
Global gold prices edged up on Thursday, underpinned by a slightly weaker U.S. dollar and deepening uncertainty in the U.S. economy due to the ongoing government shutdown — now the longest in U.S. history.
Spot gold rose modestly to around $3,986.23 per ounce, while U.S. December delivery futures added in tandem.
The softer dollar — which fell roughly 0.2% — helped make gold more affordable for holders of non‑dollar currencies, enhancing its appeal in the current climate.
Why gold is holding up:
The prolonged U.S. government shutdown has injected a wave of uncertainty into economic data flows, federal spending and broader macro outlooks. One analyst observed that despite stronger labor data, “traders haven’t lost sight of the fact that the current government shutdown … is the longest one yet.”
With the shutdown delaying key releases and clouding the outlook for growth, expectations of further monetary easing by the Federal Reserve have grown. A low‑interest environment tends to favour non‑yielding assets like gold.
The weaker dollar complements this dynamic, making gold relatively more attractive globally.
But there are caution flags:
Despite the bullish underpinnings, the market is not entirely one‑sided. Data showing private employment gains of 42,000 jobs in October, beating expectations of ~28,000, may temper hopes for aggressive rate cuts later in the year.
In fact, before these labour data and other signals, the probability of a Fed rate cut in December had been over 90%; it now stands nearer 63%.
Outlook & what to watch:
For gold to build on its current position, several variables will matter:
Resolution of the U.S. government shutdown: a draw‑out could sustain safe‑haven flows; a rapid deal might remove some of the risk premium.
Dollar direction: A sustained decline in the U.S. dollar would further bolster gold, whereas a rebound could dampen momentum.
Fed policy path: If rate cuts are delayed or reduced in size, gold’s upside may be capped. If easing becomes more aggressive, gold could benefit further.
Broader risk sentiment: Geopolitical shocks, fiscal‑policy surprises or fresh economic data can shift flows quickly.
Conclusion:
While gold is not surging rapidly at this moment, its stability amid multiple headwinds underscores its safe‑haven credentials. The combination of a softer dollar and an unsettled U.S. fiscal picture is working in its favour. Investors should remain alert to shifts in policy and macro data that could either bolster or challenge the current trend
