Government Shutdown Sends Gold Soaring to Record $3,900

TLDR

Table of Contents

Gold reached a new all-time high of $3,900 per ounce as the US government entered its first shutdown in seven years
The precious metal has surged over 48% this year, marking its biggest annual gain since 1979
Central bank purchases and rising ETF holdings have supported the rally as the Federal Reserve continues rate cuts
Silver jumped 2% to $47.56 per ounce, now up more than 60% for the year
The US government’s gold reserves are now valued at $1 trillion as investors seek protection from economic uncertainty

Gold prices broke through to fresh record highs on Wednesday as a US government shutdown began. The precious metal reached $3,900 per ounce during its fifth consecutive day of gains.

The shutdown started after Congress failed to pass a stop-gap funding package. The White House directed government agencies to execute orderly shutdown plans. This marks the first closure of federal operations in seven years.

BREAKING: Gold futures cross above $3,900/oz for the first time in history as the US government shutdown begins. pic.twitter.com/MUW5KWYItw
— The Kobeissi Letter (@KobeissiLetter) October 1, 2025

The shutdown threatens to delay key economic data releases. Friday’s non-farm payroll numbers may be postponed. These reports are critical for assessing the health of the US economy.

Gold has climbed more than 48% in 2025. This puts the metal on track for its largest annual gain since 1979. The rally represents the strongest performance in over four decades.

Central banks have been steady buyers of gold throughout the year. Exchange-traded fund holdings have also increased as investors seek safe havens. The Federal Reserve’s decision to resume interest-rate cuts has provided additional support for bullion prices.

September saw the largest monthly ETF inflows in three years. Data compiled by Bloomberg shows sustained investor interest in gold-backed funds. The SPDR Gold Shares ETF has outperformed the S&P 500 over the past three years.

Federal Reserve Policy Debates

Federal Reserve officials showed diverging views on monetary policy this week. Boston Fed President Susan Collins indicated further rate reductions may be appropriate given a weaker labor market. She also cautioned about the possibility of persistent inflation.

Dallas Fed President Lorie Logan took a more hawkish stance. She said policymakers should be cautious about additional rate cuts while inflation remains above target. The labor market remains relatively balanced according to Logan.

Gold has attracted strong safe-haven demand from multiple sources. Investors are hedging against tariff policies and changes in economic globalization. Concerns about artificial intelligence fueling a stock market bubble have also driven buying.

Physical Metal Markets

The US government’s gold reserves are now worth $1 trillion. This valuation reflects both increased holdings and higher prices. Foreign central banks continue accumulating the metal as part of reserve diversification strategies.

China has been actively building its gold reserves. Some analysts view this as an attempt to reduce dependence on the US dollar. The metal serves as a hedge for countries concerned about currency volatility.

Silver prices also surged during the trading session. The metal jumped as much as 2% to reach $47.56 per ounce. Silver now trades less than 5% below its all-time high.

Silver has gained more than 60% this year. The cheaper precious metal benefits from some of the same macroeconomic factors driving gold. Supply deficits accumulated over several years are creating market tightness.

Platinum rose during Wednesday’s session while palladium remained little changed. The Bloomberg Dollar Spot Index fell 0.2% as the government shutdown added pressure on the currency. Spot gold traded 0.8% higher at $3,888.35 per ounce at 9:34 a.m. in London after closing 0.7% higher on Tuesday.

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