Gold price rally pauses after climbing new heights

[Redator]

Gold rose for a sixth straight session on Thursday to set another all-time high, as the ongoing US government shutdown and expectations of a Federal Reserve interest rate cut continue to lift safe-haven demand.

Spot gold inched higher to a new record of $3,896.43 per ounce, but has since pulled back to around the $3,830 level. In the previous session, it traded as high as $3,895.13 an ounce.

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Three-month US gold futures followed a similar pattern, as the contract’s price rose to $3,923.30 per ounce before paring gains.

Gold has been rallying non-stop since the last week of September amid growing US federal budget concerns, which eventually led to a government shutdown. Also, the market is anticipating additional rate cuts by the Federal Reserve, with most traders pricing in another 25-basis-point cut later this month.

Historically, low interest rates have benefited non-yielding assets like gold. The metal rose more than 10% in the weeks leading up to the Fed’s September cut — its first in nearly a year — and that momentum has carried into October.

US gold reserves hit $1 trillion in value after record rally

For the year, bullion has soared 48%, supported by strong central bank buying and rising holdings in gold-backed exchange-traded funds, as institutions and traders all sought safety in the metal to shield against rising economic and geopolitical risks.

Monthly ETF inflows in September were the largest in three years, according to data compiled by Bloomberg. Chinese buyers were also scooping up more gold-backed funds, with the four most popular registering inflows last month following a period of tepid demand.

“With trade tensions and tariffs shaping the global landscape, and with geopolitical hotspots showing little sign of resolution, the environment remains supportive for safe-haven demand,” StoneX said in a note on Thursday.

“Central banks are unlikely to step back from their buying programs, particularly given the long-term diversification strategies now in place,” the financial services firm added.

The bullish outlook on gold is echoed by several major banks including Goldman Sachs, which placed the yellow metal as its “highest-conviction long commodity recommendation,” citing structurally higher central bank demand, upside risks from private sector diversification and attractive hedging properties in market downturns.

A month ago, the bank predicted that prices could even reach $5,000 if US President Donald Trump continues to try to interfere with the Fed, which would erode investor confidence in the bank’s independence.

In a note on Wednesday, Goldman analyst Daan Struyven said that the upside risks to its forecasts of $4,000 per ounce by mid-2026 have intensified due to the limited role of speculative positioning in the recent rally and a surprisingly strong Western ETF demand.

(With files from Bloomberg and Reuters)

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