Gold tops US$3,900 for first time on safe-haven demand

[BENGALURU] Gold surged past US$3,900 an ounce for the first time on Monday (Oct 6), driven by safe-haven demand amid a US government shutdown, alongside growing expectations of additional US Federal Reserve rate cuts.

Spot gold rose 0.4 per cent to US$3,900.40 per ounce as at 8.27 am after hitting an all-time high of US$3,919.59 earlier in the session.

US gold futures for December delivery gained 0.5 per cent to US$3,926.80.

The Trump administration will start mass layoffs of federal workers if US President Donald Trump decides negotiations with congressional Democrats to end a partial government shutdown are “absolutely going nowhere”, a senior White House official said on Sunday.

Fed governor Stephen Miran pressed for an aggressive rate cut trajectory again on Friday, citing the impact of the Trump administration’s policies on the economy.

According to the CME FedWatch tool, investors are pricing in additional 25-basis-point cuts in both October and December, with probabilities of 95 per cent and 83 per cent, respectively.

Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.

Gold has climbed 49 per cent so far this year, after a 27 per cent rise in 2024 on strong central bank buying, increased demand for gold-backed Exchange-Traded Fund (ETFs), a weaker US dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.

Physical gold demand in India rose last week despite record high prices as a key festival in the world’s second-biggest bullion consumer boosted purchases. Meanwhile, Chinese markets were closed for a holiday.

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SPDR Gold Trust, the world’s largest gold-backed ETF, said that its holdings fell 0.08 per cent to 1,014.88 tonnes on Friday from 1,015.74 tonnes on Thursday.

Elsewhere, spot silver was flat at US$47.98 per ounce, platinum rose 0.5 per cent to US$1,613.15, and palladium gained 0.2 per cent to US$1,263. REUTERS