US government shutdown impact weighs on markets, boosts gold to record highs amid political deadlock and economic uncertainty

The united states government shutdown impact is rattling financial markets as investors brace for potential disruption to key economic data releases.

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The risk of a shutdown grew after Congressional leaders met President Trump without resolving budget differences ahead of Tuesday’s midnight deadline.

Senate Democrat Chuck Schumer noted “large differences” remain, while Vice President JD Vance accused Democrats of holding the country hostage with their funding demands.

Although past shutdowns have often been short-lived and tolerated by markets, experts warn this time may be different due to deep political divisions.

Neil Wilson of Saxo Markets cautioned that a prolonged shutdown could seriously damage stocks, recalling the 35-day shutdown in 2018-2019 when the S&P 500 fell 14 per cent.

This heightened uncertainty is causing the dollar to weaken, as investors anticipate possible Federal Reserve rate cuts.

Stock markets traded mixed on Tuesday, with European indexes fluctuating and Asian markets closing both higher and lower.

Gold, a traditional safe haven in times of turmoil, surged above $3,871 an ounce, approaching the $4,000 mark amid escalating political and policy anxieties.

Stephen Innes of SPI Asset Management remarked that gold has become the “undisputed heavyweight” in trading rooms, reflecting growing fears rather than jewellery demand.

Concerns also mount that a shutdown could delay critical labour market data releases, which investors eagerly await to gauge the Federal Reserve’s next interest rate moves.

The market expects these reports to show a slowing job market, giving the Fed scope for further easing.

Meanwhile, oil prices fell sharply due to oversupply fears and geopolitical tensions surrounding Trump’s Gaza peace plan, with Brent crude down 0.7 per cent to $67.53 per barrel.

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As the shutdown deadline looms, markets remain jittery, watching closely for any sign of resolution or escalation.