Gold Hits Record High as Markets Brace for Possible US Government Shutdown

TDT | Manama

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Gold prices soared to a new record on Tuesday, the dollar weakened, and global stock markets traded mixed as investors prepared for a potential US government shutdown that could delay key economic data releases.

On Monday, congressional Republican and Democratic leaders met with President Donald Trump in an effort to reach a deal before the midnight Tuesday deadline. However, Senate Majority Leader Chuck Schumer said significant differences remained between the parties.

Vice President JD Vance criticized Democrats, claiming their funding demands amounted to “putting a gun to the American people’s head” and warned that a shutdown appeared likely if an agreement could not be reached.

While government shutdowns are typically short and have limited market impact, analysts urge caution. Neil Wilson of Saxo Markets noted that while most shutdowns last an average of eight days and have little effect on company profits, extended political deadlock could pose serious risks. He cited the 2018-2019 shutdown, when the S&P 500 fell 14 percent during a 35-day closure.

Wilson also highlighted recent White House threats of mass federal layoffs and ongoing policy shifts as additional factors increasing economic uncertainty and raising recession concerns.

Amid the turmoil, the dollar weakened due to expectations of interest rate cuts, making the currency less attractive to investors. European stocks fluctuated in midday trading, while Asian markets closed mixed.

Gold, traditionally a safe haven in times of uncertainty, surged above $3,871 per ounce and has gained nearly 50 percent since the start of the year. Analysts now speculate it could soon reach the $4,000 mark.