Gold prices rose in the European market on Monday, extending gains for the second consecutive session and continuing to break record highs after surpassing the $3,900 mark for the first time in history, on their way toward the psychological threshold of $4,000 per ounce.
This historic rally came amid strong safe-haven demand driven by political developments in Japan and France, the ongoing US government shutdown, and growing expectations of additional interest rate cuts by the Federal Reserve.
Price Overview
• Gold prices today: Gold rose by 1.5% to $3,945.15 — its highest level on record — from an opening price of $3,886.99, after touching an intraday low of $3,884.20.
• On Friday, gold gained 0.8%, resuming its advance after a brief pause the previous day, supported by weakness in the US dollar against a basket of major currencies.
• Last week, gold rose 3.4%, marking its seventh consecutive weekly gain — the longest winning streak since December 2024.
Strong Demand
Safe-haven demand surged on Monday amid key political developments in Japan and France over the weekend, as investors sought refuge in gold amid global political uncertainty.
In Japan, Sanae Takaichi’s victory in the Liberal Democratic Party leadership race raised expectations that the Bank of Japan’s ultra-loose monetary policy will remain in place longer, given her opposition to tightening measures.
In France, Prime Minister Sébastien Lecornu appointed Roland Lescure, a close ally of President Emmanuel Macron, as finance minister in the new government. The move came as opposition leaders threatened to topple the government if it failed to depart from Macron’s previous economic agenda.
In the United States, a senior White House official said on Sunday that the Trump administration would initiate mass layoffs of federal employees if negotiations with Democrats in Congress to end the partial government shutdown “produce no result.”
US Interest Rates
• Federal Reserve member Steven Miran reiterated on Friday the need for aggressive rate cuts, citing the impact of the Trump administration’s economic policies.
• Following weak US labor market data last week, CME FedWatch tool data showed that the probability of a 25-basis-point rate cut at the October meeting rose from 90% to 99%, while the odds of no change fell from 10% to 1%.
• To reassess these expectations, investors are closely watching the resumption of key US economic data releases and further comments from Federal Reserve officials.
Outlook
Tim Waterer, Chief Market Analyst at KCM Trade, said the yen’s weakness following Japan’s party election had reduced the number of safe-haven options available to investors, boosting gold’s appeal.
Waterer added that the ongoing US government shutdown “continues to cast a cloud of uncertainty over the economy and its potential impact on GDP.”
Giovanni Staunovo, commodities analyst at UBS, said data suggests the Federal Reserve could cut rates more than once this year.
He added: “As we expect further rate cuts, this should provide additional support for gold in the coming months, and we anticipate prices could surpass $4,000 per ounce before year-end.”
SPDR Gold Trust
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 0.86 metric tons on Friday — the second daily decline in a row — bringing total holdings down to 1,014.88 metric tons.
