Gold Prices Surge Amid U.S. Shutdown and Fed Rate Cut Expectations
Gold prices have been surging, with investors rushing to add the precious metal to their portfolios, driven by a fear of missing out (FOMO). This trend is being bolstered by the ongoing U.S. government shutdown and expectations of a Federal Reserve interest rate cut later this month.
The U.S. government shutdown, now in its third week, has contributed to the increase in gold prices. Investors are seeking refuge in gold, a traditional safe haven asset, due to the uncertainty surrounding the shutdown. Meanwhile, gold prices have been rising for three consecutive days, reaching their highest level in more than two months.
Goldman Sachs has recently revised its gold price forecast upwards. The investment bank anticipates that western Exchange-Traded Funds (ETFs) will increase their gold holdings in response to anticipated Federal Reserve interest rate cuts by mid-2026. Central banks from emerging markets, such as Kazakhstan, Bulgaria, Turkey, and China, have been actively boosting their gold reserves. These countries are diversifying their reserves in favor of gold, driven by concerns over financial stability amid the U.S. government shutdown and expectations of Fed rate cuts.
With no breakthrough yet between the two chambers of Congress regarding the shutdown, gold prices are expected to remain volatile. Investors continue to be drawn to gold, attracted by its safe haven status and the potential for further gains driven by Fed rate cuts. Central banks, meanwhile, are diversifying their reserves, further supporting gold prices.
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