Gold prices hit a new record high as fears of a US government shutdown unsettle markets and the dollar drops amid economic uncertainty

Gold prices surged to another record high on Tuesday as concerns over a possible US government shutdown unsettled markets.

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The dollar weakened while stock markets traded with mixed results as traders braced for disruption to key economic data releases.

Congressional Republicans and Democrats met President Donald Trump on Monday in a last effort to reach an agreement before the midnight Tuesday deadline.

Yet, Senate Democrat Chuck Schumer revealed that significant differences remain unresolved.

Vice President JD Vance accused Democrats of holding the American public “hostage” with their demands and suggested a shutdown was likely.

Neil Wilson of Saxo Markets urged caution. He noted that although most shutdowns are brief and typically ignored by markets, this occasion could be different due to deep political divisions.

He recalled the 35-day shutdown in 2018-2019 that saw the S&P 500 fall 14 per cent.

Adding to uncertainty, the White House has threatened mass federal job cuts, extending recent personnel culls. Economic policy shifts have also raised fears of a possible recession.

The combined prospect of a shutdown and expectations of interest rate cuts pressured the dollar lower, making it less appealing to investors.

European stock markets fluctuated during midday trading while major Asian indices closed mixed.

Gold, a traditional safe haven during times of uncertainty, climbed above $3,871 an ounce and is now approaching the $4,000 mark after gaining nearly 50 per cent since January.

Stephen Innes from SPI Asset Management described gold as the “undisputed heavyweight” in trading rooms, highlighting that its surge reflects political and policy anxieties rather than jewellery demand.

Investors are also concerned that a shutdown could delay the release of important labour market data this week, including job openings, private hiring, and non-farm payrolls.

These reports are crucial for gauging the Federal Reserve’s next move on interest rates.

Recent data has raised expectations that the Fed will cut borrowing costs twice more this year.

Oil prices continued to fall, extending Monday’s three per cent drop amid fears of oversupply as OPEC+ contemplates raising output at its upcoming meeting.

Geopolitical tensions, including Trump’s Gaza peace plan, further weighed on crude prices.

Market Snapshot at 1045 GMT:

• London FTSE 100: Flat at 9,302.25
• Paris CAC 40: Down 0.4 per cent at 7,853.55
• Frankfurt DAX: Up 0.1 per cent at 23,771.00
• Tokyo Nikkei 225: Down 0.3 per cent at 44,932.63 (close)
• Hong Kong Hang Seng: Up 0.9 per cent at 26,855.56 (close)
• Shanghai Composite: Up 0.5 per cent at 3,882.78 (close)
• New York Dow: Up 0.2 per cent at 46,316.07 (close)

Currency Highlights:

• Euro/Dollar: Up to $1.1742
• Pound/Dollar: Up to $1.3439
• Dollar/Yen: Down to 147.99 yen
• Euro/Pound: Up to 87.37 pence

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Oil Prices:

• Brent Crude: Down 0.7 per cent at $67.53 per barrel
• West Texas Intermediate: Down 0.8 per cent at $62.95 per barrel