In a volatile session for global markets, gold prices climbed to a fresh all-time high, while the US dollar weakened further on Tuesday. Investors braced for a potential government shutdown that threatens to stall critical economic reports, adding to an already tense political atmosphere in Washington.
Lawmakers from both major parties huddled with President Donald Trump on Monday, seeking common ground ahead of a looming midnight deadline for federal funding. Yet, after the talks, Senate Minority Leader Chuck Schumer described the divide as substantial, signaling little progress. Vice President JD Vance sharply criticized Democratic negotiators, claiming their insistence on certain spending priorities amounted to holding the public hostage and predicting an impasse that could force a closure of non-essential services.
Market observers, including Neil Wilson, senior market analyst at Saxo Markets, noted that while brief government halts are often shrugged off by investors, the current standoff carries unique risks. “Historical shutdowns tend to be fleeting—averaging just eight days—and rarely dent corporate earnings significantly,” Wilson observed. “But with such entrenched partisan rifts, this one might stretch out, echoing the 35-day impasse in late 2018 that triggered a 14% drop in the S&P 500.”
Compounding the uncertainty are recent White House moves toward large-scale federal workforce reductions and shifts in fiscal direction, which some fear could tip the economy toward contraction. The shadow of a prolonged disruption has investors eyeing disruptions to upcoming data releases, particularly on employment trends.
## Safe-Haven Rally Propels Gold Toward $4,000 Milestone
As political jitters mounted, gold—long a go-to refuge during turbulent times—pushed beyond $3,871 per ounce, extending its blistering run-up of nearly 50% year-to-date. Trading floors are buzzing with bets on whether the precious metal will breach the $4,000 barrier soon, according to Stephen Innes, managing partner at SPI Asset Management.
“Gold has evolved from a mere defensive play into the market’s breakout sensation,” Innes remarked. “It’s less about industrial or consumer uses these days and more a barometer of geopolitical nerves and policy flux.”
A potential shutdown could postpone vital labor statistics slated for this week, including job vacancy reports, private-sector payroll additions, and the flagship non-farm employment survey. These metrics are pivotal for gauging the trajectory of the US job market and informing the Federal Reserve’s rate decisions. Fresh signs of cooling in hiring have bolstered forecasts for two additional quarter-point cuts by the Fed this year, following its initial easing move earlier this month.
## Dollar Slides on Rate Cut Bets; Stocks Waver Globally
Anticipation of looser monetary policy eroded the dollar’s appeal, sending the euro climbing to $1.1742 from Monday’s $1.1725. Equity benchmarks painted a patchy picture: European indices hovered near even in mid-session trading, while Asian markets ended the day split.
In oil markets, crude futures deepened Monday’s 3% skid, pressured by speculation that OPEC+ might ramp up production at its upcoming Sunday gathering. Analysts like Joshua Mahony, head of market analysis at Scope Markets, also pointed to President Trump’s proposed framework for Middle East peace as a drag on energy prices, potentially easing regional tensions and oversupply worries.
As negotiations drag on, the interplay between fiscal brinkmanship and monetary expectations will likely keep markets on edge, with gold’s relentless ascent underscoring broader anxieties about stability in the world’s largest economy.
