Gold Hits Record High Amid Budget Shutdown Crisis and Geopolitical Tensions

Spot gold surged past $5,100 per ounce on Monday, marking another milestone in the precious metal’s bullish run. The surge was driven by multiple risk factors simultaneously hitting markets, with investors seeking safe-haven assets amid economic and political uncertainty.

Government Budget Shutdown Concerns Drive Safe-Haven Demand

The primary catalyst for gold’s strength is mounting anxiety over a potential U.S. government budget shutdown. Democratic senators have threatened to block the federal funding bill, particularly over disagreements regarding Department of Homeland Security (DHS) funding. These budget shutdown negotiations have intensified following civil unrest in Minneapolis, adding political pressure to already tense budget discussions. As these budget standoffs persist, investors increasingly turn to gold as protection against financial uncertainty.

Spot gold climbed 2 percent to $5,097.74 per ounce, while U.S. gold futures advanced 2.3 percent to $5,133.66. Earlier in the session, gold had touched a new record of $5,111.11, underscoring the strength of demand for the precious metal during this uncertain period.

Multi-Factor Support: Weak Dollar, Tariff Threats, and Iran Tensions

Beyond budget concerns, several other factors are supporting gold’s momentum. The U.S. dollar weakened against most major currencies as the yen rallied to its highest level in over two months on speculation of potential Japanese intervention. Meanwhile, U.S. tariff threats have resurfaced after President Donald Trump threatened 100 percent tariffs on Canadian exports if Canada pursues deals with China. This protectionist stance adds another layer of market uncertainty favoring precious metals.

Additionally, escalating U.S.-Iran tensions continue to unsettle markets. Iranian authorities unveiled a new billboard in Tehran’s central square on Sunday, viewed by markets as a warning against U.S. intervention, further boosting safe-haven demand.

Federal Reserve Decision Expected to Hold Rates Steady

Investors are also watching the Federal Reserve’s two-day policy meeting concluding Wednesday. Market consensus expects the Fed to maintain interest rates unchanged, despite pressure from President Trump to cut rates. Fed officials remain divided on whether additional rate cuts could reignite inflation concerns, creating uncertainty about the future monetary policy trajectory. This ambiguity about interest rate direction adds another reason for investors to hold gold as a hedge.

The combination of government budget shutdown risks, geopolitical tensions, and monetary policy uncertainty continues to paint a supportive backdrop for gold prices as markets navigate these overlapping challenges.