The price of Gold (XAUUSD) has officially crossed the psychological barrier of $4,000 per troy ounce for the very first time in history during trading on Wednesday (October 8, 2025). By 9:15 AM WIB, Gold reached $4,005.92 per troy ounce, climbing more than $21 or 210 pips from Tuesday’s closing price.
The surge in Gold prices this week is primarily attributed to the ongoing shutdown faced by the United States government. This shutdown is now in its eighth day with no signs of a resolution in sight. Over the last two days, Gold has soared nearly $98 (980 pips), leading to a total increase of approximately $120 (1,200 pips) up to today.
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Before this year, the last significant shutdown occurred from late December 22, 2018, to early January 25, 2019. At that time, Donald Trump was serving as the 45th President of the United States, and the shutdown lasted for 35 days, becoming the longest in history. During this period, Gold saw a substantial rise.
Market participants seem to take lessons from that period, thus driving Gold prices higher. Furthermore, the current shutdown of the US government might compel the Federal Reserve to adopt a more aggressive stance next year. This is mainly due to potential mass layoffs among government workers, particularly if the shutdown persists.
Such a situation would further deteriorate the already weak US labor market, prompting the Fed to consider more significant interest rate cuts. However, the central bank is confronted with a more complex situation as inflation in the United States begins to rise again. If the Fed cuts interest rates too aggressively, there is a risk of inflation increasing further.
Moreover, if the US economy fails to recover effectively, stagflation could ensue, characterized by sluggish economic growth paired with rising inflation. The United States experienced this phenomenon during the 1970s, a time when Gold prices surged dramatically.
