Gold price jumped above $3800 for the first time amid weak dollar and shutdown risk

Gold prices reached a new high on September 29. The weakening of the dollar made the precious metal cheaper for buyers outside the United States. Its attractiveness was also increased by strengthened hopes for a new reduction in the Fed rate and the increased risk of suspension of federal agencies in the United States.

Gold rose on Monday, September 29, to a record high above $3800 per troy ounce in Asian trading. The spot price of the precious metal rose by 1.6%, overcoming the peak of a week ago and setting a new historic high of $3819.81. U.S. gold futures for delivery in December added 0.9%, reaching $3844.

The dollar index fell 0.2% against a basket of major currencies, making gold denominated in it less expensive for buyers from other countries, Reuters reports. Investors are avoiding the dollar and U.S. government bonds today, The Wall Street Journal reported, citing a note to Swissquote Bank clients.

Bloomberg attributes the weakening of the dollar to the increased risk of a funding shutdown for the U.S. government this week, which could lead to a temporary shutdown of federal agencies. The shutdown may disrupt the publication of significant macroeconomic data, including the employment report for September, which is important for the Fed's decision.

Since the beginning of 2025, gold has risen more than 45% thanks to the Fed's return to a policy of lowering rates (which has increased the attractiveness of non-interest-earning assets), demand for the precious metal from central banks and significant inflows into gold-backed exchange-traded funds (ETFs), WSJ notes.

According to Barclays strategists Themistoklis Fiotakis and Lefteris Farmakis, gold doesn't look overvalued against the dollar and treasuries, which must account for the risk premium associated with a possible loss of Fed independence. "This makes gold a surprisingly good hedging instrument," they added.

MUFG analyst Sujin Kim agrees that a government shutdown "could delay the release of key labor market data and make the Fed's monetary policy trajectory less predictable." The U.S. Bureau of Labor Statistics is scheduled to release September data on Oct. 3. But the agency will shut down as early as October 1 if Congress fails to approve the government's budget for the new fiscal year or decide on temporary funding.

The market for other precious metals is experiencing an unprecedented deficit in 2025, which is increasing investor anxiety in London, Bloomberg reports. According to the agency, the leasing rates of precious metals, reflecting the cost of renting them for a short period of time, for silver, platinum and palladium have significantly exceeded the usually close to zero levels.

This article was AI-translated and verified by a human editor