Gold prices rose on Tuesday as the U.S. dollar weakened and investors sought safe-haven assets amid uncertainty over a potential government shutdown. This move highlights market caution as traders weigh the impact of political tensions, economic data, and central bank cues.
Spot gold rose 0.7% to around $3,985 per ounce, while U.S. gold futures settled near $4,000. The U.S. dollar index slipped to a two-week low, pressured by expectations that the Federal Reserve may hold interest rates steady for longer as inflation shows signs of easing. Treasury yields also retreated modestly, further enhancing the appeal of non-yielding assets, such as gold.
“Gold is benefiting from both a softer dollar and heightened fiscal uncertainty,” said Daniel Hayes, senior commodities strategist at Meridian Research. “Markets are clearly positioning defensively ahead of the budget deadline — investors want protection against potential volatility.”
The ongoing political impasse in Congress weighs on sentiment. Lawmakers have not finalized a spending bill to avert a partial government shutdown, which could disrupt the economy and delay key data. Prolonged uncertainty could dampen confidence and complicate the outlook.
Meanwhile, global demand for gold remains firm, particularly from central banks and Asian markets. India’s festive buying season and continued reserve diversification by emerging economies have provided a solid base of physical support. China’s steady import levels also reflect underlying demand despite slower economic growth.
From a technical perspective, gold is now approaching a key resistance zone near $4,010, with support seen around $3,950. A sustained move above $4,000 could signal further upside momentum, especially if the dollar continues to weaken or political tensions escalate.
Other precious metals followed gold’s lead — silver gained 0.9%, platinum added 0.6%, and palladium rose slightly on improved risk sentiment.
Market watchers say that with inflation moderating and the Federal Reserve signaling patience, gold could remain well-supported in the near term. “The underlying trend favors gold as long as the policy outlook stays uncertain,” Hayes added. “It’s the classic flight-to-safety trade in play once again.”
As investors brace for another week of political and economic crosscurrents, gold remains a haven amid uncertainty.