Gold Rises on Rate Hold Expectations Amid US Shutdown Concerns


Gold prices experienced an uptick on Monday as market sentiment leans towards the Federal Reserve’s maintaining interest rates amidst apprehensions about a potential U.S. government shutdown.

Recent minor increases in gold prices were attributed to skepticism regarding an immediate interest rate hike by the U.S., driven by economic data. However, the strengthening dollar tempered these gains.

Investors Turn to Gold as Federal Reserve’s Meeting Looms and Shutdown Fears Grow

Anticipation is building that gold prices will surge due to the looming threat of a U.S. government shutdown. Lawmakers are grappling over spending allocations. And the window to reach an agreement and avert a shutdown is around two weeks.

Historically, gold prices haven’t seen significant spikes during government shutdowns, with past instances showcasing relatively modest increases.

The price of gold inched up by 0.3% to $1,929.32 per ounce. While future gold delivery for December rose by 0.2% to $1,950.15 per ounce.

The Federal Reserve’s meeting this week is expect to result in the decision to maintain current interest rates, given the gradual pace of economic growth. The uncertainty surrounding the Fed’s stance is fuel by recent inflation hikes and the robustness of the U.S. economy.

If rates remain unchanged, they’re likely to stay high until at least mid-2024, influencing gold prices. Which haven’t seen substantial growth over the past year.

With rising interest rates, investments in non-income generating assets like gold become comparatively less attractive.

Other central banks, including those in China, the UK, and Japan, are also set to announce their decisions on interest rates this week, with expectations of an increase only from the Bank of England.