Gold Climbs to $4,140 as Government Shutdown Deal Boosts Rate Cut Expectations

TLDR

• Gold reached $4,140 per ounce after jumping 2.9% in its biggest daily gain since May as markets anticipated Federal Reserve rate cuts
• A bipartisan deal to end the 40-day US government shutdown is expected to pass, which will restore economic data releases showing a worsening outlook
• Soft October jobs data and declining consumer sentiment increased odds of a December Fed rate cut to 64%, with 77% probability by January
• President Trump’s proposal for $2,000 stimulus checks raised inflation concerns, strengthening gold’s appeal as a store of value against currency debasement
• Gold has gained over 55% in 2025, on track for its best annual performance since 1979, with Goldman Sachs forecasting $4,900 per ounce by Q4 2026

Gold prices extended their rally on Monday, reaching approximately $4,140 per ounce after posting their largest single-day gain since May. The precious metal rose 2.9% in the previous trading session as markets anticipated further interest rate cuts from the Federal Reserve.

The price surge came as the US Senate advanced a bipartisan agreement to end the longest government shutdown in American history. The 40-day shutdown has delayed the release of economic data that economists expect will show deteriorating conditions. President Donald Trump has expressed support for the deal, which is expected to pass and allow the government to reopen within days.

Once the government resumes operations, delayed economic reports will provide information about the state of the economy. Recent data has already painted a weak picture, with October job losses in the government and retail sectors. Consumer sentiment also dropped in early November as households expressed concern about economic conditions.

The soft economic data has increased market expectations for Federal Reserve rate cuts. According to CME Group’s FedWatch tool, traders now see a 64% chance of a rate cut in December. The probability rises to approximately 77% by January.

Stimulus Check Proposal Adds Inflation Concerns

Gold received another boost from President Trump’s weekend suggestion that Americans could receive stimulus checks of “at least $2,000 a person.” The proposal, described as a tariff dividend, resembles Covid-era payments that some economists blamed for contributing to the 2021-2022 inflation surge. Treasury Secretary Scott Bessent has downplayed the idea.

Daniel Ghali, a strategist at TD Securities, noted that markets appeared to be reacting to Trump’s stimulus check proposal. “Many are clearly eager to pull the trigger in gold markets,” he said in a note to clients.

Rate Cut Outlook Supports Gold

Non-yielding assets like gold typically perform well when interest rates fall. Lower rates reduce the opportunity cost of holding gold, which pays no interest or dividends. The metal also benefits during periods of economic uncertainty and concerns about currency debasement.

Gold could trade between $4,200 and $4,300 per ounce by year-end, according to Grant. He considers $5,000 per ounce a reasonable target for the first quarter of 2026.

Christopher Wong, a strategist at Oversea-Chinese Banking Corp, said the Federal Reserve is expected to continue easing policy into 2026. Interest rates are likely to trend lower, supporting gold prices.

Not all Federal Reserve officials agree on the path forward. Mary Daly, president of the Federal Reserve Bank of San Francisco, warned against keeping rates too high for too long. Alberto Musalem, president of the St. Louis Fed, urged caution on additional cuts and expects the economy to rebound in the first quarter of 2026.

Year-to-Date Performance

Gold has gained more than 55% in 2025, putting it on track for its best annual performance since 1979. The metal reached a record high above $4,380 per ounce last month before pulling back. Several factors have driven the rally, including elevated central bank buying and increased inflows to exchange-traded funds.

Goldman Sachs Group Inc maintains a positive outlook for gold, forecasting the metal will reach $4,900 per ounce by the fourth quarter of 2026. Other precious metals also posted gains on Monday, with silver rising 4.5% to $50.46 per ounce, platinum climbing 2.4% to $1,582.50, and palladium adding 3.1% to $1,422.79.

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