Gold surged to historic highs during early Asian trading on Monday, propelled by a marked decline in the Japanese yen and ongoing speculation around potential interest rate cuts by the Federal Reserve.
The precious metal found additional support from persistent worries about a prolonged U.S. government shutdown. Lawmakers in Washington have made scant headway towards securing a new spending agreement, keeping investor anxiety elevated.
In spot markets, gold leaped 0.8% to reach an unprecedented $3,920.31 per ounce. Futures for December delivery saw a comparable increase, touching $3,944.45 an ounce.
The rally in gold prices coincided with notable turbulence in currency markets. The Japanese yen suffered a sharp drop in early trade, depreciating by 1.45% to 149.59 against the U.S. dollar. The currency’s slide followed news that conservative figure Sanae Takaichi won the leadership of Japan’s ruling Liberal Democratic Party, positioning her as the country’s next prime minister.
The ongoing budget impasse in the United States also lent support to safe-haven assets like gold. Despite the shutdown, broader U.S. risk markets appeared to largely disregard the political deadlock, according to market sources.
According to CME FedWatch Tool, markets were positive that the Federal Reserve will continue to cut interest rates in October with a 99% odds for a 25 basis point rate cut. This followed the same amount of rates cut in September.
