Gold prices surged to fresh all-time highs on Wednesday as investors sought safe-haven assets amid heightened political turmoil in Washington, where the U.S. government officially entered its first shutdown in seven years.
At 12:01 a.m. ET, the federal government began a funding lapse after Senate votes failed to advance either the Republican or Democratic budget proposals.
With no compromise plan on the table, non-essential departments have ceased operations, and thousands of federal employees are facing unpaid leave.
The shutdown, which recalls the record-breaking 2018 stoppage under former President Donald Trump, threatens to quickly ripple across the economy. Immediate effects include a halt to many government services and delays in key economic data releases — starting this Friday with what was supposed to be the Bureau of Labor Statistics’ monthly jobs report.
Amid the uncertainty, gold (GC=F) futures climbed 1.1% in early London trade to $3,916.50 per troy ounce, extending a nearly 5% rally over the past five sessions. Spot gold prices mirrored the move, rising 1.1% to $3,886.
Analysts note that the political deadlock in the U.S. is reinforcing gold’s appeal as a hedge against both market volatility and potential longer-term economic disruption.
With investors unnerved by the shutdown’s timing at the start of the new fiscal year, the yellow metal’s momentum may continue if the funding impasse drags on.