Gold Reaches New Record as U.S. Shutdown Fears Drive Safe-Haven Demand

Economic

Commodity

Summary:

Gold surged to a new all-time high, fueled by growing concerns over a potential U.S. government shutdown, which could delay crucial economic data and complicate the Federal Reserve's interest-rate decisions...

Gold prices reached a fresh record on Tuesday, extending the previous day's rally, as fears over a U.S. government shutdown prompted increased demand for safe-haven assets. The shutdown concerns have created uncertainty about the release of key economic data, which is critical for shaping the Federal Reserve’s policy decisions. The record-breaking rise in gold prices reflects broader economic anxieties, coupled with a favorable environment for precious metals, including central bank demand and the expectation of ongoing rate cuts.

Gold's Surge Amid Shutdown Fears

Gold gained as much as 0.9%, reaching an all-time high of $3,867.25 an ounce. This price surpasses the previous day's record when it closed 2% higher. A lack of progress in U.S. government funding negotiations raised the risk of a shutdown, which could disrupt the publication of important economic reports, including the September jobs data. This uncertainty about the U.S. economy has spurred investors to flock to gold as a store of value.

The prospect of a government shutdown has created market volatility, particularly affecting U.S. Treasury bonds and the dollar. The likelihood of delayed economic data, such as the jobs report, has made it difficult for investors and the Federal Reserve to gauge labor market health, complicating the central bank’s policy decisions. Lower yields on U.S. government bonds tend to boost the appeal of precious metals like gold, which does not offer interest payments. Additionally, a weaker dollar makes gold more affordable for foreign buyers.

Silver and Platinum Markets

Other precious metals, including silver and platinum, paused their recent gains after reaching multi-year highs. These metals have seen substantial increases this year, with silver up by 63% and platinum rising by 76%. Supply shortages, particularly in London, have driven up lease rates for these metals, signaling concerns about dwindling stockpiles. Precious metals are also benefiting from increased inflows into exchange-traded funds (ETFs) that are backed by these assets.

Gold's price surge to new record highs reflects heightened uncertainty in global markets, driven by U.S. political risks and the broader economic environment. With concerns over a potential U.S. government shutdown, the delay in vital economic data is pushing investors towards safe-haven assets like gold. This rally is further supported by central-bank demand and expectations of continued rate cuts by the Federal Reserve, positioning gold for sustained strength in the near term.

Source: Bloomberg

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Samantha Luan

Economic

Forex

Political

The Swiss National Bank made its most significant sales of the franc in more than three years, acting to stem a surge in the currency caused by Donald Trump’s tariff push.Switzerland’s central bank purchased foreign exchange worth 5.1 billion francs ($6.4 billion) in the second quarter, according to data published on Tuesday. That’s in line with estimates made by UBS Group AG before the announcement.

The interventions mark the end of an effective 15-month hiatus in the SNB’s market interactions, reflecting just how volatile conditions became after Trump’s April 2 announcement of “reciprocal tariffs.” The franc still rose some 10% against the dollar in the April-June period, while against the euro it strengthened about 2%.On the eve of the announcement, Switzerland and the US issued a joint statement vowing not to manipulate currencies, with the SNB pledging to keep its monetary policy focused on price stability. In the document, both sides promised not to influence the franc-dollar exchange rate in order to gain an economic advantage.

Since June, the Swiss have been on a watch list of economies monitored by the Treasury for its foreign exchange policies. A spokesperson in Bern insisted at the time that the two countries were in a “constructive dialog,” though that was before the US slapped a 39% tariff on Swiss exports. Switzerland found itself branded as a currency manipulator during Trump’s first term in the White House.SNB President Martin Schlegel has repeatedly insisted that the central bank’s interventions only serve the purpose of keeping Swiss inflation from over- or undershooting.

While the institution is stressing in its policy statements that it stands ready to use the tool — in both directions — policymakers appear to have adopted a new doctrine on the franc that focuses on more judicious confrontations with traders. In previous years, it has mobilized billions to steer the franc and insisted that the currency is overvalued.After the SNB’s reduction of borrowing costs to zero, it faces the choice of stepping up currency purchases again or introduce negative rates, which it avoided in its policy decision last week.

The SNB publishes a tally of its transactions on a quarterly basis but with a three-month delay. Data for the period from July to September are due on Dec. 31.

Source: Bloomberg Europe

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Gerik

Economic

With a potential government shutdown looming on the horizon, markets are bracing for the impact of halted economic data releases, including the September jobs report. The lack of a funding deal in Congress could disrupt government services and complicate the Federal Reserve's ability to make informed decisions on monetary policy.

Shutdown Timeline and Impact on Data

The U.S. government is set to shut down on Wednesday morning unless a last-minute deal is struck between Republicans and Democrats. A shutdown would halt the publication of key economic data, including the jobs report, which is crucial for the Federal Reserve’s decision-making process on interest rates. Without this data, particularly on the labor market, the Fed may face difficulties in evaluating economic conditions ahead of its October policy meeting. Analysts are concerned that the lack of labor market data could hinder the central bank’s ability to make informed decisions about rate cuts.

A shutdown would have immediate consequences, including disruptions to essential services such as air travel and national parks. The Transportation Security Administration (TSA) and air traffic controllers are expected to work without pay, potentially leading to delays and unscheduled absences, especially among TSA agents. Additionally, national parks, IRS services, and financial regulators would close or significantly reduce their operations. However, Social Security and Medicare payments would continue, and mail delivery would remain unaffected due to the self-funding status of the U.S. Postal Service.

New Plans for Mass Layoffs and Agency Closures

A unique aspect of this potential shutdown is the Trump administration's directive to consider mass layoffs within government agencies. These layoffs could lead to permanent job cuts, which would mark a departure from previous shutdowns, where workers were furloughed with the expectation of back pay. The uncertainty surrounding the duration of the shutdown adds to the economic anxiety, as prolonged closures could deepen the impact on government services and public confidence.

Certain sectors will be more heavily affected by the shutdown than others. Government-dependent industries, including food assistance programs and FEMA, will face significant disruptions, while other sectors, such as financial markets, will see minimal effects as they are not primarily funded by the annual appropriations process. Public schools, funded at the local level, will remain open, though federally funded programs like Head Start could face closures.

The looming U.S. government shutdown could have wide-reaching economic consequences, delaying critical data, causing disruptions in public services, and leading to uncertainty about the Fed's policy decisions. While essential services like Social Security and Medicare will continue, other government functions, particularly those reliant on federal funding, could grind to a halt, compounding the challenges already facing the U.S. economy.

Source: Yahoo Finance

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Gerik

Economic

OpenAI reported a 16% revenue increase for the first half of 2025, reaching around $4.3 billion, according to financial disclosures shared with shareholders, as reported by The Information on Monday. This marks a significant rise in its revenue compared to all of 2024. Despite the growth in income, OpenAI faced a $2.5 billion loss, primarily driven by the costs associated with its artificial intelligence development and the operation of ChatGPT.

High Costs and Financial Outlook

OpenAI’s heavy spending on research and development (R&D) continued to be a key factor in its financial situation. The company spent approximately $6.7 billion on R&D in the first half of 2025. This includes the development of AI technologies and operational costs for maintaining and improving ChatGPT. Despite these costs, OpenAI ended the first half of the year with $17.5 billion in cash and securities.

OpenAI is targeting $13 billion in revenue for the full year, alongside an $8.5 billion cash burn target. The company’s significant financial investments reflect its ongoing efforts to advance AI capabilities while managing operational costs. Despite the burn rate, OpenAI is making substantial strides in revenue growth, indicating strong demand for its AI products.

Partnerships and Future Growth

In August, it was reported that OpenAI was in discussions about a potential stock sale to allow employees to cash out, with the company valued at approximately $500 billion. Additionally, Nvidia announced plans to invest up to $100 billion in OpenAI, providing critical data-center chips that will support the company's future AI developments.

OpenAI's revenue growth in the first half of 2025 highlights the increasing market demand for AI technologies, especially ChatGPT, despite the high operational costs associated with its development. With strong financial backing, including significant investments from Nvidia, the company is positioning itself for continued growth, aiming to meet its ambitious revenue and cash-burn targets for the year.

Source: Reuters

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ING

Economic

Commodity

Forex

USD: Lower USD/JPY looks attractive

The dollar has suffered from rising risk of a US government shutdown and falling oil prices since the weekend, with the yen emerging as the top performer. President Trump said that a shutdown tomorrow is now likely after little progress on congressional negotiations.A lower USD/JPY may well remain the favourite trade during the shutdown. It lost 1.5% during the 2018-19 shutdown, and is currently trading 1% above its short-term fair value, according to our model.

On the oil side, our commodities team has been highlighting downside risks for energy prices into year-end, and we continue to see that playing in favour of the yen and euro, and against the dollar and CAD.Focus today will also shift back to US data, as the week of jobs data starts with the closely monitored JOLTS report for August. Remember the July issue was bad, with job openings dropping and layoffs accelerating. Conference Board Consumer Confidence data for September is also out today: consensus is expecting a deterioration from 97.4 to 96.0. Fedspeak includes Bostic, Jefferson, Collins and Goolsbee.

Today’s numbers can be quite impactful on the dollar, which now has a more balanced positioning and embeds a less pessimistic macro view compared to a couple of weeks ago. There is currently an 8bp gap between market pricing (42bp) for year-end and the Fed’s median Dot Plot projection, which, in our view, raises the bar for further hawkish repricing and lowers it for a revamp of dovish bets. This means downside risks for the dollar.That said, we cannot ignore that US data momentum has improved, and our economics team sees room for an upside surprise in US payrolls, which are scheduled for release on Friday, but might be delayed due to the shutdown.

EUR: eyes back on 1.180

Oil prices declined yesterday following reports that OPEC+ is considering another supply increase. However, Brent’s inability to reclaim the $70 threshold underscores the market’s continued reluctance to fully price in geopolitical risk.

It is now clear that the bar for a material FX reaction due to geopolitics is high, and the short-term fate of EUR/USD is predominantly an extension of US macro. The only contribution to the eurozone-end this week will come from CPI data. France and Germany are releasing their preliminary September figures today. An acceleration in headline readings is widely expected this month, and should keep the pressure off the ECB to review its current cautious stance anytime soon. On the margin, it should be positive for the euro.

The looming US government shutdown is raising some upside risks for EUR/USD, which may test 1.180 in the next couple of days. That said, we still think JPY remains a more attractive way to play the shutdown.

Also worth monitoring today is a central bank event in Helsinki, featuring speeches from several ECB members – including President Lagarde – alongside Riksbank Governor Thedéen and select Bank of England policymakers.

AUD: Hawkish RBA hold to help AUD

The Reserve Bank of Australia held rates unchanged and struck a moderately hawkish tone in the statement and press conference. Governor Michele Bullock reiterated increased concerns about price stickiness, despite admitting to monthly CPI volatility. The sturdy jobs market is also playing a role in the more hawkish assessment, in spite of non-negligible economic uncertainty.

Markets are now pricing in only 10bp of easing for the November meeting and 13bp by December. Our call remains that the RBA should cut again in the fourth quarter, but risks are now more balanced. Expect even higher short-term rates and AUD sensitivity to incoming inflation and jobs market data.

AUD has been one of our favourite currencies into this RBA meeting, and we think it has some further room to run, also in the crosses against currencies that have unattractive domestic central bank stories (CAD, above all). On AUD/USD, we still target 0.68 in the fourth quarter.

PLN: The zloty remains range-bound with some upside potential

Today's main highlight will be September inflation in Poland – as always, the first number in the region. We expect an increase from 2.9% to 3.0% YoY, in line with expectations, driven by a shallower decline in gasoline prices compared to August. Core inflation is estimated to have eased further, while food and energy inflation remained broadly stable. More pronounced declines in headline inflation are expected in November and December.

Unless there are any major surprises, the print is unlikely to tell us much about the next steps in monetary policy. However, the president recently signed a law freezing energy prices for the rest of the year, which National Bank of Poland Governor Adam Glapinski mentioned at his last press conference as a condition for an October rate cut.

The market is close to pricing in two rate cuts this year, while the NBP is indicating only one rate cut this year. Potentially, any upward surprises in inflation could bring market expectations closer to the NBP's communication. We believe that EUR/PLN will remain range-bound between 4.240 and 4.275 for a longer period of time. Given the current spot level near the upper end of this range, we believe that the PLN has some potential to strengthen in the short term.

Source: ING

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Glendon

Economic

Forex

British households put more away in savings in the second quarter, a sign of continued caution amid rising inflation and an uncertain economic outlook.

The share of disposable incomes saved by consumers rose to 10.7% from 10.5% in the first quarter, the Office for National Statistics said on Tuesday. Real household disposable income per head increased just 0.2%.

The ONS also confirmed that growth in gross domestic product eased to 0.3% in the second quarter, a slowdown from the bumper 0.7% growth in the first three months of the year. It was in line with economists’ expectations. On a per capita basis, GDP rose 0.2%.

The figures meant the UK enjoyed the fastest rate among the Group of Seven economies — a key aim for Prime Minister Keir Starmer’s administration. However, the weakening in the second quarter is expected to mark the start of a more pedestrian period for growth.

The ONS said government spending helped support the economy during a difficult period when households were squeezed by rising inflation, and businesses were hit by higher employment taxes and US tariffs.

At Labour’s annual party conference on Monday, Chancellor of the Exchequer Rachel Reeves hinted that more tax rises may be needed to shore up the public finances, saying that the “world has changed.” Higher interest costs, worse borrowing figures and a weaker economic outlook are set to conspire to wipe out the thin fiscal headroom she left herself earlier this year.

Source: Bloomberg Europe

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Gerik

Economic

China's manufacturing sector contracted for the sixth consecutive month in September, with the official Purchasing Managers' Index (PMI) improving slightly but still below the critical 50-mark that separates contraction from expansion. This marks the longest period of contraction since 2019, reflecting ongoing challenges in the country's economy, including sluggish domestic demand and uncertainties tied to U.S. trade tensions.

Mixed PMI Data

The official PMI for September rose to 49.8 from 49.4 in August, indicating a slight easing in contraction, but still below the 50 level. A private sector PMI survey by RatingDog painted a more positive picture, with the PMI rising to 51.2 from 50.5 in August, signaling modest growth. However, the mixed results underscore the persistent weakness in China’s manufacturing sector, where companies are facing tough competition and price pressures, forcing them to cut prices and operate with thinner margins.

The ongoing contraction in factory activity is largely driven by weak domestic demand, exacerbated by lingering trade tensions with the United States. These tensions have led to tariff increases, which have affected trade between the two countries, creating further uncertainty. Although a pause in U.S. tariff hikes has been extended until November, a significant breakthrough in trade negotiations hinges on the potential transfer of TikTok’s ownership from China’s ByteDance to a U.S. company, which still requires Beijing's approval.

Economic Conditions and Policy Outlook

Despite the slump in manufacturing, some analysts believe China’s economy may be showing signs of slight improvement, particularly in output. However, the country continues to face significant economic challenges, including a downturn in the property sector, high unemployment, and weak consumer spending. In response, some economists are predicting that the People’s Bank of China could implement a rate cut by the end of the year to stimulate spending and investment. While the central bank refrained from cutting rates in September, following the U.S. Federal Reserve’s first rate cut of the year, market watchers are hopeful for further action in the coming months.

China’s manufacturing sector remains under pressure as the economy grapples with weak domestic demand and ongoing trade tensions with the U.S. While some signs of improvement in private sector activity offer hope, the broader economic environment remains challenging. Policymakers are expected to continue exploring options, including potential rate cuts, to encourage economic recovery as the country navigates its way through a complex set of domestic and global challenges.