Gold extended its powerful rally on Monday, breaking above $3,800 an ounce for the first time as a weaker dollar and growing political uncertainty in Washington sent investors rushing toward safe-haven assets. The move underscores gold’s role as one of the top-performing investments of 2025, with prices already soaring more than 45% year-to-date.
Spot gold climbed as much as 2% to $3,833.59 an ounce, eclipsing last week’s record and securing a seventh consecutive weekly advance. The broader precious metals complex followed suit, with silver, platinum, and palladium also notching sizable gains. Silver jumped to $46.87, its highest level since 2011, while platinum briefly traded above $1,600 for the first time in more than a decade.
The surge comes as investors brace for the possibility of a US government shutdown. Without a short-term spending deal, federal funding will lapse this week, stalling critical government services and delaying key economic data releases, including September’s jobs report. Such an outcome could inject fresh volatility into financial markets, intensifying demand for gold as a defensive asset.
At the same time, the dollar slipped against major peers, further fueling gold’s rise. A softer greenback typically makes precious metals more affordable for international buyers, expanding global demand. The Bloomberg Dollar Spot Index fell 0.2% on Monday, extending recent weakness as traders weighed the implications of fiscal gridlock in Washington.
Beyond near-term political risks, gold continues to benefit from shifting expectations for Federal Reserve policy. Weaker job growth or signs of cooling inflation could strengthen the case for another rate cut when the Fed meets in October. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the metal more attractive to both institutional and retail investors.
Despite ongoing debate among Fed officials about the pace of easing, markets are increasingly betting on additional support. That prospect, coupled with concerns about the central bank’s independence amid political pressures, has encouraged investors to seek hedges in tangible assets such as gold.
This year’s rally has been reinforced by sustained demand from both central banks and exchange-traded funds (ETFs). Gold-backed ETFs now hold their largest reserves since 2022, reflecting consistent inflows as investors look to diversify portfolios and guard against macroeconomic risks. Meanwhile, central banks across Asia and the Middle East have continued adding to their bullion reserves, contributing to persistent tightness in the physical market.
Silver, platinum, and palladium markets are also showing signs of strain. Analysts note that lease rates — the cost of borrowing metal — for these commodities have surged well above normal levels, signaling limited availability. Additional volatility may emerge as the US reviews potential tariffs on platinum-group metals, a move that could further squeeze supply.
With gold repeatedly setting new highs, questions are mounting about whether the rally is overextended. Yet many analysts argue bullion remains reasonably priced relative to the dollar and Treasury markets. As long as political risks remain elevated, the dollar stays under pressure, and the Fed leans toward easing, gold may continue to climb into uncharted territory.
For investors, the latest breakout reinforces gold’s dual role as both a crisis hedge and a long-term portfolio stabilizer. If Washington fails to reach a spending compromise, the metal’s safe-haven status could push prices toward fresh records before year-end.
