Gold Surges Past $3,800 to Record High as Fed Rate Cuts Meet Government Shutdown Gray Rhino

TradingKey - After six consecutive weeks of gains, gold prices continue to climb, breaking through the psychological $3,800 per ounce barrier for the first time in history. The rally is being driven not only by expectations of Federal Reserve rate cuts and a weakening dollar, but also by mounting fears over a U.S. government shutdown.

On Monday, September 29, international gold prices rose over 1%, surpassing the key $3,800/oz level and reaching $3,805.87/oz — a new all-time high. Gold has now gained over 11% in the past month, extending its sixth straight weekly gain. Meanwhile, silver surged more than 2%, breaking above $47/oz.

2025 Gold Price Chart, Source: TradingKey

Improving prospects for Fed rate cuts have provided sustained momentum for gold’s record-breaking run. After trading in a narrow range during June and July, gold resumed its strong upward trend at the end of August and is up 45% year-to-date.

Easing monetary policy weakens the U.S. dollar, making dollar-denominated commodities like gold cheaper for foreign buyers — boosting demand.

Barclays Bank noted that gold remains undervalued relative to both the U.S. dollar and Treasury yields. Given the risks to the Fed’s independence, Treasuries should carry a premium — which makes gold an attractive alternative.

As the U.S. prepares to enter a new fiscal year on October 1, Washington is once again facing a government shutdown due to Congress’s failure to pass a temporary spending bill. President Donald Trump has held emergency talks with top leaders from both parties in the House and Senate in a last-minute effort to avoid a shutdown.

While such political standoffs have become routine — often dubbed a “gray rhino” event (a highly probable, high-impact threat) — this episode carries greater risk. Threats of permanent federal layoffs and deeply strained inter-branch relations suggest the consequences could be more severe than in past shutdowns.

The potential shutdown threatens the release of key economic data, including the September Nonfarm Payrolls report (Oct 3) and CPI (Oct 15). Analysts believe that weak employment figures, when they arrive, will support further monetary easing — reinforcing gold’s appeal.

Even if official data is delayed, the uncertainty itself is becoming a catalyst for gold, as investors seek safe-haven assets amid rising policy and political volatility.

Market expectations remain firmly anchored on two more 25-basis-point rate cuts this year, despite delays or data gaps — and that outlook continues to underpin bullion demand.

Some analysts said that market sentiment is extremely bullish, and another test of fresh highs is possible this week. However, with positioning in the gold market already stretched, some caution is warranted.

Still, with falling real interest rates, geopolitical tensions, and growing distrust in institutional stability, gold’s fundamental case remains strong.