Gold Prices Surpass $3,800 on U.S. Shutdown Fears

Amid the possibility of a U.S. federal government shutdown (temporary suspension of government operations), international gold prices have surpassed $3,800 per ounce for the first time in history.

Reuters Yonhap News

According to the London Bullion Market Association (LBMA), as of 3 p.m. on the 29th (local time), the spot gold price stood at $3,826.85 per ounce, up 1.5% from the previous day. In addition, the December gold futures contract traded on the Chicago Mercantile Exchange (CME) closed at $3,855.20 per ounce, up 1.2% from the previous session.

Recently, gold prices have continued to climb, repeatedly breaking record highs. The price of gold has risen by as much as 45% this year.

Global geopolitical uncertainty, concerns over inflation, and questions about the U.S. dollar’s status as a reserve asset have been the main drivers behind this year’s surge in gold prices. In particular, the sharp rise in gold prices on this day occurred as the U.S. dollar weakened amid the possibility of a federal government shutdown.

Additionally, some analysts attribute the recent surge to an influx of funds into spot gold-based exchange-traded funds (ETFs). Deutsche Bank analyzed, "The fact that ETF demand has returned so strongly indicates aggressive gold buying by both central banks and ETF investors."

Gold ETFs have recorded net inflows for four consecutive weeks. As a result, gold holdings in ETFs have approached the all-time high recorded during the pandemic. According to the World Gold Council (WGC), gold holdings in ETFs increased by nearly 100 tons this month, marking the largest monthly increase since April.

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