Gold prices climbed to an all-time high on Tuesday, September 30, as the US government officially shut down for the first time in nearly seven years.
The political deadlock in Washington not only rattled investors but also sent Wall Street futures tumbling and weakened the US dollar.
The shutdown, triggered after lawmakers failed to reach a funding deal by the end of the fiscal year, forced the closure of non-essential federal services.
Hundreds of thousands of civil servants are now facing unpaid furloughs, while critical sectors such as healthcare and social benefits could experience delays.
Meanwhile, the market reaction was swift.
Gold surged to a new record of $3,875.53 per ounce, boosted by investors’ rush to safe-haven assets.
The rise came despite earlier optimism that the Federal Reserve might cut interest rates further.
The deadlock stems from a clash between Democrats and Republicans over healthcare spending.
Democrats are pushing to restore cuts to Medicaid, while Republicans are refusing to back down.
Senate Republicans fell short of the votes needed to pass a temporary funding measure, leaving the country without a budget.
Republican House Speaker Mike Johnson quickly placed the blame on Democrats, writing on X that “Democrats have officially voted to CLOSE the government.”
However, Democratic leaders Chuck Schumer and Hakeem Jeffries fired back in a joint statement, saying their party was “ready to find a bipartisan path forward to reopen the government in a way that lowers costs and addresses the Republican healthcare crisis.”
President Donald Trump added fuel to the fire, threatening to use the shutdown to target Democratic priorities and cut federal jobs.
“So we’d be laying off a lot of people that are going to be very affected,” he said. He claimed the pause could help him “get rid of a lot of things we didn’t want, and they’d be Democrat things.”
His comments heightened uncertainty for government workers already bracing for unpaid weeks and raised fears of prolonged disruptions.
The shutdown has also stirred anxiety among investors. While most past shutdowns have had limited market impact, this one is different.
Despite the turbulence, some experts advised calm.
Michael Brown, strategist at Pepperstone, urged investors not to overreact: “I remain strongly of the view that (investors) should continue to look through the political noise as, in the grand scheme of things, the expiration of federal funding doesn’t make especially much difference.”
The gold market never ceases to impress