Gold soars to record high above $3,900

October 06, 2025 (MLN): Gold prices surged past the $3,900 mark for the first time on Monday, driven by strong safe-haven demand as the yen weakened sharply and the ongoing U.S. government shutdown fueled economic uncertainty.

Expectations of further Federal Reserve rate cuts added to the bullish momentum.

Spot gold was up 1.44% at $3,942.20 an ounce as of [2:19 pm] PST, according to data reported by Mettis Global.

U.S. gold futures for December delivery rose 1% to $3,947.30.

“Yen weakness on the back of the Japanese LDP elections has left investors with one less safe-haven asset to turn to, and gold has taken full advantage,” said Tim Waterer, Chief Market Analyst at KCM Trade to CNBC.

He added that the “enduring U.S. government shutdown continues to cast a shadow over the economy,” heightening concerns about potential GDP losses and driving investors toward gold.

The yen plunged to its weakest level against the U.S. dollar in five months after fiscal dove Sanae Takaichi was elected leader of Japan’s ruling party, paving the way for her to become the next prime minister.

In Washington, a senior White House official warned that mass layoffs of federal workers could begin if President Donald Trump deems negotiations with congressional Democrats to reopen the government as “going nowhere.”

Meanwhile, Federal Reserve Governor Stephen Miran reiterated calls for an aggressive rate-cut path on Friday, citing the drag from Trump administration economic policies.

Gold has soared 49% so far in 2025, building on a 27% gain in 2024, as strong central bank buying, robust ETF inflows, a weaker dollar, and persistent geopolitical tensions underpin demand.

The rally gained further traction last month after the Fed cut rates by 25 basis points and signaled more easing to come.

According to the CME FedWatch Tool, investors are pricing in additional quarter-point rate cuts in October and December, with probabilities of 95% and 83%, respectively.

As a non-yielding asset, gold typically benefits from lower interest rates and times of economic uncertainty. The metal first broke above $3,000 in March and surpassed $3,700 in mid-September, prompting many brokerages to adopt a bullish stance on its outlook.

Elsewhere in precious metals, spot silver rose 0.8% to $48.33 per ounce, platinum gained 1.1% to $1,621.90, and palladium advanced 0.8% to $1,270.25.

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