Gold prices hit new record amid US government shutdown

The price of gold rose over 1.1 percent on Monday, reaching a record high of $3,945.12 as of 05:00GMT, as the US federal government shutdown adds to uncertainty as investors bet on more interest rate cuts at the upcoming Federal Reserve meeting.

After reaching a new record high, the price of gold was around $3,926.40 as of 06:20 GMT.

The price of gold fluctuated between $2,536.91 and $3,945.12 over the past 12 months; it gained over 48% during the same period, AA writes, KosovaPress reports.

While a government shutdown does not automatically result in a full-blown economic crisis, it creates major disruptions to many aspects of American life, while also adding to uncertainty about the state of the world's largest economy.

Many federal employees will be furloughed or forced to work without pay, while others will be placed on mandatory furlough until a new budget is passed. Each federal agency has its own shutdown plan, determining which government employees are essential.

The shutdown also means that some key economic data will not be released in the coming days, as the Bureau of Labor Statistics' contingency plan stated that economic data would not be released during a government shutdown, meaning nonfarm payrolls, initial jobless claims and inflation figures could be delayed.

Meanwhile, aside from concerns about the US government shutdown, gold prices continued their upward trend, driven by geopolitical risk, concerns over the global economy, central bank demand for gold, and the Federal Reserve's interest rate cut cycle.

At the insistence of US President Donald Trump, the Federal Reserve cut its policy rate by 25 basis points last week.

Markets are expecting further rate cuts at the Federal Reserve meetings in October and December. Weak inflation figures and rising unemployment data, as well as Trump, could push the Federal Reserve to cut interest rates.