WASHINGTON (dpa-AFX) - Gold prices catapulted to a new record high on Monday, rebounding from Friday's decline, as expectations for a rate cut by the U.S. Federal Reserve continue to rise against the backdrop of economic uncertainty even as investors assess signals of a truce in the ongoing U.S.-China faceoff over rare earth minerals.
Front Month Comex Gold for October delivery soared by $146.50 (or 3.50%) to $4,336.40 per troy ounce. Notably, this is a new peak for gold prices.
Front Month Comex Silver for October delivery surged by $1.2550 (or 2.52%) to $51.119 per troy ounce.
The U.S. government shutdown entered day number 20 today.
As the government closure enters the third week, concerns about deeper cuts to the economy have started surfacing as the stalemate between Republicans and Democrats does not show signs of cooling off.
The Senate is voting for the 11th time today.
In an interview with CNBC, the White House economic advisor Kevin Hassett said, 'I think the Schumer shutdown is likely to end sometime this week,' referring to Senate Democratic leader Chuck Schumer. Hassett further stated that there's a shot that things will come together this week.
Even as U.S. President Donald Trump is set to take on a multi-country tour of Asia beginning October 26, his administration is reportedly planning to suspend the Supplemental Nutrition Assistance Program, which currently benefits around 42 million Americans, and he may not bring them back.
Despite Hassett's statements, traders remain uncertain about the future of the economy.
In addition, the lives of 750,000 furloughed federal workers as well as the consequences of delay in key economic data are compounding the grim economic scenario.
Against this backdrop, the U.S. Federal Reserve is preparing for a policy meeting next week.
The Bureau of Labor Statistics has announced that it will publish the September 2025 Consumer Price Index on Friday, October 24. Barring that, any actual view of the economy is now marred by the absence of several official employment data.
The available information so far only points to weaker job growth.
Hence, markets are pricing in a rate cut by the Fed especially after recent comments by U.S. Federal Reserve Chair Jerome Powell wherein he spoke about 'policy shifts' that markets see as hints for rate cuts.
The expectations of a rate cut have conveniently boosted the yellow metal price.
Recently, frustrated by China's curbs on its export of rare earth minerals critically needed in manufacturing and technology sectors in the U.S., Trump threatened China with 100% new tariffs, set to take effect from November.
The yellow metal, which has been on a record rally in the past few months, benefitted directly from the sudden increase by U.S.-China trade tensions.
However, last week, Trump himself expressed doubts about the sustainability of his high tariffs on China. He added that he was going to meet Chinese President Xi Jinping in South Korea, as scheduled earlier for this month-end and stated willingness to reconcile if China makes some concessions.
U.S. Treasury Secretary Scott Bessent also stated that U.S-China official talks on tariffs are planned for this week in Malaysia.
The softening in Trump's stance could not take away the safe-haven demand as the current uncertainty supported the precious metal.
On the geopolitical front, the Gaza Peace Plan brokered by Trump suffered a minor setback this weekend, as both sides accused each other of breaching the agreement. However Israel later clarified that it had begun renewed enforcement of the ceasefire. The mild strain in the truce helped gold initially.
Russian President Vladimir Putin is scheduled to meet Trump in Budapest, Hungary. Ukraine President Volodymyr Zelenskyy has stated he is willing to participate if invited.
Foreign ministers of European Union have gathered in Luxembourg to plan a new round of sanctions against Russia. Foreign policy chief Kaja Kallas stated today that 'Russia only negotiates when put under pressure' and added that the EU is working to adopt its 19th package of sanctions against Russia later this week. She welcomed the upcoming U.S.-Russia talks and wished that it is good if Russia stops the war.
According to CME Group's FedWatch Tool, investors are betting on a 98.9% chance of a 25-basis-point interest rate cut at the Federal Reserve's upcoming October 28-29 meeting.
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