WASHINGTON (dpa-AFX) - Gold prices catapulted on Monday as traders are increasingly confident emerging signs of a weakening U.S. economy will pressure the U.S. Federal Reserve to execute rate cuts even as efforts to end the government shutdown gain momentum.
Front Month Comex Gold for November delivery soared by $112.40 (or 2.81%) to $4,111.80 per troy ounce.
Front Month Comex Silver for November delivery skyrocketed by $2.1600 (or 4.50%) to $50.177 per troy ounce.
Due to the ongoing U.S. shutdown, for the second consecutive month, the monthly non-farm payrolls report has been postponed, adding to the government's data blackout.
The difficulty in assessing pressures due to inflation and wage growth has made both the markets and the U.S. Federal Reserve rely on private data.
Last week, a report from the University of Michigan showed that the consumer sentiment index slid to 50.3 in November after falling to 53.6 in October. This three-and-a-half-year low is the consequence of the ongoing shutdown.
Prior to that, the Challenger job cuts data showed that U.S.-based employers announced 153,074 job cuts in October, the highest total for the month since 2003, compared with 54,064 in September.
Federal Reserve Chair Jerome Powell has warned investors not to assume that another rate cut is a given, while several other officials expressed divergent views on further cuts with contrasting perspectives on inflation and job numbers.
However, undeterred investors are optimistic that the private data figures could compel the Fed to relax its policies.
CME Group's FedWatch Tool is currently indicating that investors are betting on a 63.4% chance of a 25-basis-point interest rate cut at the Federal Reserve's upcoming meeting on December 9 and 10.
Meanwhile, in the U.S., the government shutdown entered day number 41 today.
Last night, a glimmer of hope that the closure would end soon surfaced, with around eight Democrats joining with Senate Republicans to advance a bill to fund the government.
In a rare Sunday session, lawmakers agreed to move forward with a short-term funding bill by a wafer-thin margin of 60-40.
Reportedly, the deal includes an agreement to vote in December on extending subsidies for healthcare which had been the primary demand of Democrats.
Notably, the current lockdown is the longest on record in the U.S. Around 1.4 million federal staff are either working without pay or on unpaid leave with the opportunity to return to work being slim for tens of thousands of the workforce facing layoffs.
Last week, the U.S. Supreme Court while hearing cases against the legality of tariffs imposed by U.S. President Donald Trump, raised suspicions over the validity of these levies.
However, Trump defended the policy and stated that every American (except the wealthy) would soon receive at least $2,000 from tariff revenues.
Despite the signs of the end of shutdown in sight (though not certain), investors are confident of rate cuts, which supported gold prices today.
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