NEW YORK (Realist English). Gold prices climbed above $3,800 per troy ounce on Monday morning, extending a record-breaking rally ahead of a potential US government shutdown that has unsettled markets and weighed on the dollar.
Bullion has risen 45 per cent since the start of the year, driven by mounting concerns over US debt sustainability, persistent inflation, and questions about the dollar’s long-term role as the dominant reserve currency. Analysts say the latest surge reflects a powerful combination of central bank demand and renewed inflows into gold-backed exchange traded funds.
“The fact that ETF demand has re-entered the scene so forcefully means that there are two forms of ‘aggressor’ bids for gold, from central banks and ETF investors,” Deutsche Bank analysts wrote in a client note.
Data from the World Gold Council show September inflows into ETFs are on track to reach nearly 100 tonnes — the fastest monthly pace since April — pushing total holdings close to their pandemic-era highs. For four consecutive weeks, gold ETFs have recorded net inflows, underscoring renewed appetite among institutional investors.
The looming US budget crisis has added further momentum. Without a short-term funding agreement, federal funding will lapse on Tuesday. President Donald Trump is set to meet lawmakers later on Monday to attempt to avert a shutdown.
Central banks worldwide have been expanding their bullion reserves this year, reinforcing gold’s role as a counterweight to the dollar. Speculative investors are also heavily positioned: hedge funds now hold record net long positions worth $73bn, according to Commodity Futures Trading Commission data.
“They are not pulling back on these positions, because recent policy speeches and inflation all point to lower rates and sustained inflation,” said Michael Haigh, head of commodities research at Société Générale.
John Reade, senior market strategist at the World Gold Council, said fear of missing out was increasingly evident. “Hedge funds that had previously missed the move in gold prices are now trying to get in,” he noted, adding that the strongest inflows had been into the largest and most liquid ETFs, typically favoured by institutional investors.