Gold Records on Shutdown Fears as Asia Reacts to Tariffs

Gold (XAU) continued to rise to record highs today, early Tuesday, 30 September, amid increasing odds of a US government shutdown and newly announced tariffs. On Monday, 29 September, US President Donald Trump and Democrats failed to agree on extending funding beyond Wednesday (04:00 GMT), risking a delay in the Non-Farm Payrolls (NFP) due Friday. 

Meanwhile, Asian shares also gained today, despite US futures remaining flat, potentially supported by contracting but improving PMIs in China, which imply further stimulus. The Australian dollar (AUD) also advanced after the RBA kept rates unchanged, as the bank noted sticky inflation, while the dollar index (DX) declined.

TL;DR

• Gold spiked past $3,850 as the risk of a shutdown grew and a potential delay in the NFP loomed.

• New US tariffs: 10% on softwood timber and 25% on specific wood products from Oct 14, plus cabinet and vanity duties from Oct 1.

• Tariff rates are set to rise to 50% and 30% on 1 Jan 2026 under the announced timetable.

• Asian equities were mixed, with Nikkei (NIY) and ASX (SPI200) lagging amid hawkish BOJ and RBA tones.

• Focus turns to JOLTs pre-shutdown; if a shutdown is averted, NFP drives gold next, while a prolonged shutdown would likely support gold.

Why Did Gold Set a New Record on 30 September?

Gold prices accelerated to $3,800 per ounce on Monday and surged beyond $3,850 in early Tuesday trading as concerns about a US government shutdown intensified ahead of the 1 October deadline. Republicans and Democrats failed to reach a breakthrough in funding on Monday, as Democrats showed little to no support for a partisan bill that would not maintain health benefits for 24 million Americans beyond their expiry at the end of 2025. If a shutdown takes place, the Department of Labour has confirmed that only one Bureau of Labour Statistics employee will continue working, rendering the release of Friday’s NFP impossible. With the Federal Reserve putting more emphasis on the jobs market, investors are becoming anxious about the Fed’s commitment to cutting interest rates two more times this year. The current October rate cut has an 89% chance of occurring.

Besides the political issue, Trump also announced on Monday a 10% tariff on softwood timber and lumber, as well as a 25% tariff on specific wood products for companies not manufacturing furniture in the US, which is poised to take effect on October 14. This follows a sweeping announcement made just a few days ago, on 26 September, to impose duties on kitchen cabinets, vanities, and other products, which takes effect on 1 October.  Trump also set a deadline for an increase in these levies to 50% and 30%, respectively, on 1 January 2026.  Canada, Mexico, and Vietnam are some of the biggest suppliers of softwood lumber and wood furniture to the US, with the EU, UK, and Japan rates capped at lower rates. (Source: Reuters)

Trump Tariffs Weigh on Asian Sentiment

Despite the US government potentially shutting down partially, Asian share markets traded higher on Tuesday, as the chances of the Fed cutting rates remain relatively intact. The possibility of delayed jobs data appears to be seen as positive for Fed cuts, as the focus shifts to existing labour figures, which show a bleak picture. The most recent inflation figures, as seen in the PCE data, also came in line with expectations last Friday. However, performance among the Asian indices varied, with gains in some regions capped following Trump’s tariff announcement. APAC stocks gave up gains, and Nikkei and ASX 200 underperformed on the back of hawkish central bank rhetoric.

Japan’s Nikkei fell following a more hawkish BOJ summary of opinions, while Australia’s ASX declined to trade flat after the RBA struck a hawkish tone, citing inflation risks. Earlier gains in Asia were partially attributed to a stronger handover and potential for further Chinese stimulus, following the improvement in the Manufacturing PMI, which remained in contraction, and the decline in the Services sector. The combination raised chances of stimulus, with experts suggesting that the PBOC might pursue other monetary policy tools to maintain liquidity. The Aussie gained in response to the RBA.

Key Events to Watch Besides Shutdown: JOLTS, NFP

With investor focus now shifting to what data is available, markets will likely pay more attention to Tuesday’s JOLTs, as it is the one event preceding the potential shutdown. Naturally, the spotlight will remain on the shutdown itself, as it would have broader implications in markets, including support for gold. However, similar standoffs have occurred several times over the past decade, and were always resolved at the eleventh hour. A complete resolution may not be found immediately, but an extension that would keep the US government funded until 21 November could be struck. 

If the shutdown risk dissipates, all eyes will shift to the NFP, leaving gold dependent on the labour data. A miss would support gold prices, as it would imply a more dovish Fed. However, a prolonged stalemate with the US government shutting down would also create a bid environment for gold if it lasts longer than two weeks, as it would hurt growth.

*Past performance does not indicate future results. The above are only projections and should not be taken as investment advice.