Gold surged to a new high above $3,800 for the first time as the market now sees the US facing the risk of a government shutdown this week unless Congress passes the latest funding legislation.
At 9.20am, gold was at $3,842, up 0.24% since it opened early Tuesday in Asian trading.
The yellow metal has been hovering around $3,700 for the past few days, supported by the momentum of the US Personal Consumer Expenditures (PCE) inflation report on Friday.
The data came in line with expectations, with inflation still above the 2% target while keeping the focus on the labor market as a clue to the Fed’s next steps.
The US dollar and Treasury yields generally declined, offsetting gold's support, while ongoing geopolitical tensions, tariff concerns and a potential US government shutdown continue to be high on the minds of the market.
In addition, Fed officials' speeches this week will continue to be closely watched for any expectations of the outcome of the next FOMC policy meeting.
