Gold hits record high amid U.S. shutdown fears and weak labor data

October 01, 2025 (MLN): Gold prices soared to a record high on Wednesday as investors flocked to safe-haven assets amid rising concerns over a potential U.S. government shutdown and signs of a weakening labor market, which reinforced expectations of imminent interest rate cuts by the Federal Reserve.

Spot gold was up 0.99% at $3,867.09 an ounce as of [10:26 am] PST, according to data reported by Mettis Global.

U.S. gold futures for December delivery climbed 0.7% to settle at $3,901.40.

The U.S. dollar index hovered near a one-week low, making dollar-denominated gold more appealing to international buyers.

“Gold is being supported by a softer dollar, escalating political tensions surrounding the potential U.S. government shutdown, and broader geopolitical uncertainty,” said Nicholas Frappell, global head of institutional markets at ABC Refinery to CNBC.

The U.S. Senate on Tuesday failed to pass a funding extension bill, moving the country closer to a shutdown. Former President Donald Trump also weighed in, threatening further cuts to the federal workforce.

A shutdown could delay the release of critical economic data, including Friday’s closely watched non-farm payrolls report, according to CNBC.

Meanwhile, Labor market data released on Tuesday showed only marginal growth in U.S. job openings for August, with hiring rates declining indicating a cooling employment landscape.

The soft Labor data has heightened expectations for monetary easing. Traders are now pricing in a 97% probability of a 25-basis-point rate cut at the Fed’s upcoming meeting, with a 76% chance of another cut in December, according to CME Group’s FedWatch tool.

Investors are also awaiting the ADP National Employment Report, due later today, for further clues on the labor market's health.

“It’s hard to see an immediate end to gold’s rally. We expect further gains in the near term,” said Michael Hsueh, precious metals analyst at Deutsche Bank,  as noted by CNBC.

Gold, which does not yield interest, typically performs well during periods of economic and political uncertainty and in low-interest rate environments. It has surged more than 47% so far this year.

Other precious metals also rallied. Spot silver rose 1.5% to $47.39 per ounce, reaching its highest level in over 14 years. Platinum climbed 1.4% to $1,595.85, while palladium advanced 0.9% to $1,267.75. 

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