Gold Rises Amid Ongoing U.S. Shutdown, Geopolitical Tensions

(RTTNews) - Gold prices advanced on Tuesday, driven by traders' concerns about the consequences of a prolonged U.S. government shutdown on financial markets and the global economy along with ongoing geopolitical tensions.

Front Month Comex Gold for October delivery rose by $28.10 (or 0.71%) to $3,976.60 per troy ounce.

Notably, this is a new record high close for gold, which has increased for three consecutive sessions.

Front Month Comex Silver for October delivery sharply lost by 90.30 cents (or 1.88%) to $47.179 per troy ounce.

The U.S. government shutdown, which began on October 1, entered the seventh day today. Strong disagreements between Republicans and Democrats over the extension of Obamacare subsidies has led to the suspension of of non-essential government services across the U.S.

Yesterday, the Senate again failed to break the stalemate, leading both political parties to trade blames for the current imbroglio.

While an estimated 750,000 federal employees have been furloughed, many others including U.S. military members are working without pay. So far, no downsizing has begun though.

Markets seem to be more impacted by the delay in key economic data releases than the economic uncertainty due to the ongoing shutdown, as the stalled details are vital for the U.S. Federal Reserve's monetary policy decision-making.

August trade deficit data set to be released today has been withheld due to shutdown.

The 10-year yield is now at 4.166% and the two-year yield stands at 3.598%.

Despite the absence of clear data, according to CME Group's FedWatch Tool, investors are betting on a 94.6% chance of a 25-basis-point interest rate cut at the Federal Reserve's October 28-29 meeting.

On the political front, grappling with a debt crisis, France is seeing successive changes in leadership. Sebastien Lecornu resigned as prime minister amid opposition over the country's contentious budget, which contained several austerity measures and spending cuts.

In Japan, Sanae Takaichi is set to become the next prime minister. Previous Prime Minister Shigeru Ishiba had warned that the "country's fiscal situation is undoubtedly extremely poor." In the developed world, Japan's debt is now currently the largest.

In addition, the U.K. is struggling to come up with a budget and has stated that hard choices are ahead.

Economic uncertainty in France (the EU's second largest economy) with a total debt of nearly $6.5 trillion, and in Japan (total debt $11.1 trillion) have increased anxiety among global investors.

Fed Chair Jerome Powell's speech on Thursday is anticipated by markets to gain insights on the Fed's understanding of the economy.

On the geopolitical front, the Gaza Peace Plan proposed by U.S. President Donald Trump to end the Israel-Palestine war is yet to be accepted by the Palestinian Hamas militant group. Yesterday, delegations representing both sides began indirect talks in Egypt. Earlier, Trump had warned both sides to sign the deal fast to avoid massive bloodshed.

In the ongoing Russia-Ukraine war, Rosenergoatom, a Russian nuclear energy company accused Ukraine of striking the cooling tower of its Novovoronezh nuclear power plant overnight yesterday. Ukraine has previously accused Russia of engaging in attacks around its nuclear sites, such as at Zaporizhzhia and Chernobyl.

Global geopolitical uncertainty is also pushing investors to non-yielding gold.