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Gold hits record as US shutdown fears weigh on Dollar and data outlook
Gold surged to a fresh record above $3,865/oz while Treasuries held gains, as mounting odds of a US government shutdown threatened to delay high-impact economic releases that guide Federal Reserve policy.
Gold breaks to new all-time high (~$3,867/oz intraday); on track for the biggest annual gain since 1979.
Treasuries steady after a prior rally; DXY softer, aiding metals.
Shutdown risk clouds payrolls and CPI timing; BLS operations could pause under contingency plans.
Flight to safety meets a data blackout risk
Gold’s breakout reflects a stacked macro wall: potential US shutdown, ongoing trade frictions, and skepticism about US “exceptionalism” as growth cools unevenly. With investors fretting that a funding lapse would delay the payrolls report and possibly CPI, hedging demand rose and Treasury prices stayed firm following Monday’s bid. A softer dollar amplified the move.
Market tacticians note that repeated last-minute compromises have dulled shutdown shock value, but the data-vacuum angle is new for this cycle: fewer timely readings could complicate the Fed’s “recalibration” path and keep risk premia elevated.
Fed path: Cuts still priced, cadence in question
Rate-cut expectations remain, but the timing hinges on inflation trends and labor softness—both potentially obscured if releases slip. The prospect of delayed data keeps investors focused on financial conditions and market-based proxies (breakevens, curves) until the official prints land.
Shutdown mechanics: What could slip
If funding lapses at fiscal year-end, many federal operations pause. Under current guidelines, BLS would halt most activity, likely delaying payrolls; CPI is next in line. Census reports (retail sales, housing) are also at risk. Markets would lean harder on private-sector trackers in the interim, raising volatility around proxy releases.
Some desks argue that gold’s relentless run became “background noise,” but a 2% pop from elevated levels signals renewed anxiety that a shutdown could trigger fresh turbulence. The flip side: a funding deal could unleash a sharp pullback in gold as the dollar stabilizes and rate volatility cools.
Gold’s record underscores a simple setup: data uncertainty + policy uncertainty = higher hedging demand. A shutdown would blur the macro picture and could slow the Fed’s communication cadence. Avoidance of a shutdown, by contrast, risks a quick mean-reversion in haven trades. For now, markets are balancing resilient risk appetite with a sturdier cushion in duration and bullion.
