US shutdown fears add to gold's safe haven lure as rally nears best month in 14 years

President Trump and opponents from the Democratic Party could not agree during a White House meeting resolve the crisis, earlier on September 30, with Vice President JD Vance cautious ahead of the Tuesday midnight deadline.

International gold prices are looking set for their best month in 14 years, after having soared 46 percent so far in 2025, setting it up for the best year since 1979. The precious metal prices crossed $3,800/oz earlier on September 30, fuelled by a slew of factors including worries of a looming US government shutdown, which may be used to lay off 'non-essential' workers.

Investors feared that the uncertainty around a US government shutdown may also delay the release of US jobs data, due on Friday, and seen as crucial in determining the rate cut trajectory by the Federal Reserve. Read More

President Trump and opponents from the Democratic Party could not agree during a White House meeting resolve the crisis, earlier on September 30, with Vice President JD Vance cautious ahead of the Tuesday midnight deadline.

"I think we're headed to a shutdown because the Democrats won't do the right thing," Vice President Vance said. Standoffs over US budget have increasingly become routine at White House Washington and are often resolved at the last minute.

Layoff Fears

A memo by the Office of Personnel Management at the White House has said that training and onboarding of new federal employees will not be allowed following any shutdown, but employees who oversee any firings are to continue their work, indicating that the Trump administration may scale down the administration's size and identify 'non-essential' workers who it could let go.

This unprecedented fear of the White House using a shutdown to eliminate federal jobs instead of a furlough can impact the job market and the economy, adding to the uncertainty this time around. The last shutdown during Trump's first administration in 2018 had lasted 35 days and was the longest in American history.

Read More: Jim Rogers on India, China, the Dollar, Gold and Silver

Haze Over Markets

"The looming government shutdown creates a haze of uncertainty over the market, which has served to accelerate gold's gains," Reuters quoted Tim Waterer, KCM Trade's Chief Market Analyst. Bloomberg News quoted a note by Nicky Shiels of MKS PAMP SA, that said, "It’s internalizing an expected subdued jobs growth in September and perhaps some US shutdown threat."

Recent economic data from the US has lifted expectations of additional rate cuts this year, sending the prices higher for a third-successive quarter.

CNBC International quoted a note by Michael McLean, the public policy senior analyst at Barclays, who said, “We have reason to think that a shutdown this time may not follow past precedent,” and could result in fresh uncertainty on the economic effects of such a developments.