Gold Climbs to Record as US Government Shutdown Boosts Havens

(Bloomberg) -- Gold reached a new all-time high as the US began a government shutdown, threatening upheaval including delays to key economic data releases.

Bullion rose to touch $3,875.53 an ounce, rallying for a fifth day. That came as a stop-gap funding package failed to avoid a closure in Washington and the White House instructed government agencies to “execute their plans for an orderly shutdown” — the first in seven years.

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A suspension in federal operations risks adding further pressure on the dollar, while the release of data critical to assessing the health of the US economy, including Friday’s non-farm payroll numbers, may see delays.

Bullion has soared more than 47% this year, putting it on track for the biggest annual gain since 1979. The rally has been supported by central-bank buying, and rising holdings in gold-backed exchange-traded funds as the Federal Reserve resumed interest-rate cuts. Monthly ETF inflows in September were the largest in three years, according to data compiled by Bloomberg.

Markets were also closely monitoring US officials’ diverging views on monetary policy. On Tuesday, Boston Fed President Susan Collins said further rate reductions may be appropriate this year given a weaker labor market, but officials needed to remain wary about the possibility of persistent inflation. On the other hand, Dallas Fed President Lorie Logan said policymakers should be cautious in considering additional interest-rate reductions while inflation remains above target and the labor market relatively balanced.

Against that backdrop, gold has also drawn strong haven demand amid lingering concerns about the central bank’s independence. Last week, Fed Governor Lisa Cook’s attorneys urged the US Supreme Court to let her stay on the job while she fights President Donald Trump’s attempt to fire her.

Silver, meanwhile, jumped as much as 2% to $47.5598 an ounce — less than 5% from an all-time high. The cheaper precious metal is up more than 60% this year, with gains underpinned by some of the same macro factors driving gold, as well as persistent market tightness as several years of supply deficits come to a head.

Spot gold was up 0.1% at $3,864.60 an ounce at 1:11 p.m. in Singapore, after closing 0.7% higher on Tuesday. The Bloomberg Dollar Spot Index was flat. Silver was trading almost 1% higher — after losing 0.6% in the previous session. Platinum and palladium both fell.

--With assistance from Yihui Xie and Preeti Soni.