Gold Holds Steady as U.S. Shutdown Nears End — But the Global Gold Rush Shows No Signs of Stopping Gold has already surged more than 57% year-to-date, hitting an all-time high of $4,381.21 on October 20, propelled by geopolitical tensions, concerns over U.S. fiscal stability.

Gold prices steadied on Wednesday as investors awaited a crucial vote in the U.S. House of Representatives to reopen the federal government, a move that could restore clarity to economic data releases and shape the Federal Reserve's path on rate cuts. Yet beyond the immediate Washington drama, the world's oldest safe-haven asset is in the midst of an extraordinary rally that is reshaping markets, central bank strategies, and investor behavior.

Gold Pauses, But the Trend Remains Bullish

At 0837 GMT, spot gold traded steady at $4,131.80 per ounce, while U.S. gold futures for December delivery rose 0.5% to $4,137.20. Analysts say the metal's pause is merely a breather in a months-long uptrend.

"Everyone is awaiting more clarity on the government shutdown and when the data is coming out of the U.S. again," said Giovanni Staunovo, analyst at UBS. "It's probably some stability before prices keep going up… nothing from the structural side has completely changed."

Gold has already surged more than 57% year-to-date, hitting an all-time high of $4,381.21 on October 20, propelled by geopolitical tensions, concerns over U.S. fiscal stability, and a dovish shift in the Fed's monetary stance.

A Shutdown-Scarred U.S. and Shifting Market Expectations

The U.S. Senate earlier this week approved a deal to restore federal funding following the longest government shutdown in American history. The House is now expected to pass the same measure — potentially reopening government operations and data pipelines that have been frozen for weeks.

Meanwhile, economic data continues to reflect strain. Payroll processor ADP reported that U.S. companies have been cutting over 11,000 jobs per week through late October, underscoring labor market weakness. Markets are now betting heavily on a Fed rate cut in December, with the CME FedWatch Tool showing a 67% probability of a 25-bps cut, up from 62% a day earlier.

According to ANZ Research, gold's breakout above the $4,050 resistance confirms "a continuation of the prevailing bullish momentum." The next test, analysts say, lies in the $4,160–$4,170 zone — a breach that could send prices back toward October's record high.

Central Banks Lead the Gold Charge

Behind gold's meteoric rise lies a quiet but powerful shift in global reserve management. For the first time since 1996, gold now accounts for a larger share of central bank reserves than U.S. Treasuries — a signal of waning confidence in dollar assets.

"Investors are watching gold not just as a hedge against inflation, but as a barometer for everything from central bank policy to geopolitical risk," said Amy Gower, Metals & Mining Strategist at Morgan Stanley. "We see further upside in gold, driven by a falling U.S. dollar, strong ETF buying, continued central bank purchases, and a backdrop of uncertainty supporting demand."

Morgan Stanley has raised its 2026 gold forecast to $4,400 per ounce, from a previous $3,313, and expects prices to exceed $5,000 by late 2026 if the current macro conditions persist.

ETF Inflows and Retail Frenzy

Institutional and retail investors alike are piling into gold. Exchange-traded funds (ETFs) backed by physical gold posted record inflows of $26 billion in Q3 2025, taking total assets under management to $472 billion — another record.

Even small investors are joining the rush, lured by headlines of record highs and uncertainty in equities and bonds. The declining U.S. dollar, hurt by fiscal instability and de-dollarization trends, has made gold more affordable for foreign buyers, reinforcing the rally.

Fed Cuts and the 1990s Parallel

Gold's strong performance has historically coincided with Fed easing cycles. Since the 1990s, gold prices have climbed around 6% on average in the 60 days following the start of a rate-cutting cycle, as lower yields boost non-yielding assets.

With expectations of imminent cuts, markets see parallels with previous eras of U.S. fiscal uncertainty — though this time, geopolitical risk and de-dollarization add extra fuel.

Caution Flags

Not all analysts are euphoric. "There's a risk of demand destruction if prices stay elevated," warned Gower. Central banks may slow purchases once reserve targets are met, and jewelry demand — which accounts for 40% of global gold consumption — is already weakening, with Q2 jewelry sales hitting their lowest since 2020.

Meanwhile, miners are struggling to keep up. Global gold mine supply has grown only 0.3% per year since 2018, and despite higher prices, few new projects are breaking ground. Environmental hurdles, regulatory delays, and financial constraints have kept output flat.

"The chances of a new super-cycle of capital expenditure by gold producers are limited," said Michael Harleaux of Morgan Stanley Research. "Profitable miners will expand cautiously — but a major greenfield boom remains unlikely."

The Bigger Picture: Gold as a Mirror of Uncertainty

From central bank vaults to ETF portfolios, gold's resurgence reflects deep global unease — over debt, policy credibility, and the future of the U.S. dollar. Even as Washington prepares to end its shutdown stalemate, the broader uncertainty that powered gold's 2025 rally remains intact.

As UBS's Staunovo summed up: "This is not a short-term spike. Structurally, nothing has changed — and that's exactly why gold keeps shining."