Gold Reaches Record High as Dollar Weakens and US Shutdown Threatens Economy
Gold prices have climbed to another record level while the US dollar weakened on Tuesday as investors reacted to the growing risk of a government shutdown in the United States. The political standoff in Washington has unsettled global markets, pushing traders toward gold, a traditional haven in times of uncertainty.
Lawmakers in Congress are still struggling to agree on a funding deal before the midnight deadline. After meeting President Donald Trump, top Democrat Chuck Schumer warned that there were still “large differences” between the two parties. On the other side, Vice President JD Vance accused Democrats of endangering Americans with their demands, saying a shutdown looks likely.
Analysts warn that while shutdowns usually have little effect on markets, the situation may be different this time due to the deep political divisions. Neil Wilson of Saxo Markets explained that most shutdowns last only a few days, with an average of eight. However, he reminded investors that the 35-day shutdown of 2018–2019 caused the S&P 500 index to drop by 14 percent. A longer shutdown could bring fresh risks for the US economy and global markets.
The dollar weakened further as investors expect the Federal Reserve to cut interest rates again this year. Lower rates reduce the appeal of the currency for global investors. Stock markets across Europe traded mixed, while Asian markets closed with small gains and losses.
Gold surged above $3,871 per ounce, sparking speculation that it could soon hit $4,000. This marks a nearly 50 percent increase since the beginning of the year. Stephen Innes of SPI Asset Management noted that gold has now become “the star performer” in the markets, reflecting political and economic anxiety more than demand for jewellery.
Investors are also worried about the possible delay of key US economic data if the shutdown begins. Reports on job openings, private hiring, and non-farm payrolls were expected this week. These figures are crucial for the Federal Reserve’s next decision on interest rates. Recent trends show a slowdown in the labour market, which could allow the Fed to loosen policy further.
Meanwhile, oil prices extended their losses, dropping after a 3 percent fall on Monday. Concerns about oversupply and possible OPEC+ decisions to raise output have pressured the market. Analysts also noted that President Trump’s Gaza peace plan added more uncertainty for oil.
At the same time, global stock indexes showed mixed movements. London’s FTSE was flat, Paris’ CAC 40 slipped by 0.4 percent, and Frankfurt’s DAX rose slightly. In Asia, Japan’s Nikkei closed lower, while Hong Kong and Shanghai gained. The US Dow Jones index closed 0.2 percent higher.
The coming days will be crucial as investors watch both the political negotiations in Washington and the release of economic data. For now, gold remains the biggest winner as traders look for safety in the face of possible turbulence.
