Continued US Government Shutdown Boosts Gold Gains Amid Strong Bets on Federal Rate Cuts

Gold prices rose in local and international markets during Thursday's trading, driven by the ongoing US government shutdown crisis—the first in almost seven years—and the failure of lawmakers to reach an agreement on government funding.

According to a report by the "i-Sagha" platform, which specializes in gold and jewelry trading, these increases were also supported by growing expectations for interest rate cuts by the US Federal Reserve.

Price Movements Locally and Globally

Saeed Imbabi, Executive Director of i-Sagha, said that local gold prices rose by about 15 EGP compared to the close of yesterday's trading, bringing the price of a 21-carat gold gram to 5,240 EGP. Internationally, the ounce rose by about $23 to record $3,890.

He explained that the price of a 24-carat gold gram reached 5,989 EGP, the 18-carat recorded 4,491 EGP, and the 14-carat reached 3,487 EGP, while the price of the gold pound (coin) settled at 41,920 EGP.

The report noted that gold prices had risen by approximately 45 EGP on Wednesday. The 21-carat opened trading at 5,180 EGP and touched 5,245 EGP before closing at 5,225 EGP. The global ounce, meanwhile, rose by $9, from $3,858 to $3,867, after touching the $3,900 level during the session.

Best Monthly Performance in 16 Years

Gold registered a strong performance in September, rising 11% locally, equivalent to 490 EGP, while increasing 12% globally, valued at $411 per ounce.

The report clarified that gold ended the month at new record levels, marking its best monthly performance in 16 years, driven by the increased demand for safe havens amid global political and economic turmoil, coupled with growing bets on US interest rate cuts.

Supportive Environment and Continuing Risks

The report confirmed that the US government shutdown fuels demand for gold as a safe haven, while rising rate-cut expectations keep US Treasury yields low and weaken the Dollar, providing additional support for gold.

In the near term, the focus remains on developments in the government shutdown, which has already begun to delay the release of key economic data such as unemployment claims and factory orders. The Bureau of Labor Statistics (BLS) also announced it would suspend its activities, likely postponing the release of the Non-Farm Payrolls (NFP) report.

Political and Economic Ramifications

The US Senate witnessed another failure to pass a temporary funding package after being unable to secure 60 votes. Wednesday's session ended with a result of 55 to 45, the same as the previous vote, confirming the shutdown will continue throughout the week and possibly longer.

On another note, the Supreme Court rejected President Donald Trump's attempt to dismiss Lisa Cook, a Federal Reserve Governor, keeping her in her post until January. This alleviated some concerns about the Board's independence. In a separate context, Trump threatened to impose a 100% tariff on pharmaceutical imports, but his administration postponed the decision to allow drug companies the opportunity to reach new pricing agreements and expand domestic production.

Labor Data and the Dollar Under Pressure

Employment data released by ADP showed that the US private sector lost 32,000 jobs in September, compared to expectations of adding 50,000 jobs. Furthermore, the August data was revised to a loss of 3,000 jobs instead of an initial gain of 54,000, which increased pressure on the Dollar.

The Dollar Index is trading near a one-week low at 97.60 points, while US bond yields remained weak, with the 10-year yield approaching 4.09% and the 30-year yield near 4.70%.

Strong Forecasts for $4,000 Per Ounce

Market forecasts suggest that gold could exceed the $4,000 per ounce level, supported by purchases from central banks, individual, and institutional investors. Joni Teves, a strategist at UBS, explained that gold is still "under-owned" by investors, which provides room for further gains in the coming quarters as the Fed's monetary easing cycle begins.

UBS believes the pace of the rise may slow toward the end of 2026 as economic conditions improve and the easing cycle stops. However, the structural shift that has made gold a core component of investment portfolios will shield prices from any sharp corrections, keeping them at historically high levels in the long term.

The Week's Agenda and Monetary Policy Outcomes

Regarding monetary policy, Susan Collins, President of the Boston Federal Reserve, said that "a modest rate cut might be appropriate if the data confirms it." Meanwhile, Lorie Logan, President of the Dallas Federal Reserve, warned of the limited scope for cuts, while Vice Chair Philip Jefferson avoided taking a clear stance, merely noting that "both sides are under pressure."

Thus, gold stands at a crucial crossroad: record levels reflecting a political-economic shock in the US, and strong bets on continued price appreciation toward $4,000 per ounce. With a positive start to the fourth quarter of the year, the path forward remains contingent on the developments of the US government shutdown and the timely release of awaited economic data in the coming days.