Gold and Silver Gain Amid U.S. Government Shutdown Deal

 

Gold and Silver Gain Amid U.S. Government Shutdown Deal

(Bullion News Network) – The spot price of gold gained over $100 per troy ounce on Monday as the U.S. Senate took the first steps in a plan expected to end the U.S. government shutdown, which had become the longest in United States history. Silver prices also increased on Monday, with the precious metal adding over $2.20/ozt to its spot price amid the ongoing shutdown deal. The price action favored silver, driving the gold-silver ratio more than a point lower. Eight Senate Democrats stepped across the aisle to join Republicans in a plan that would end the shutdown in exchange for a later vote on extending Affordable Care Act (ACA) subsidies. Senate Republicans said on Monday that they would work quickly to finalize the deal and end the shutdown, which threatened SNAP benefits for millions of Americans and left many federal workers without pay.

Precious metals climbed on the news. Some traders believe that the end of the government shutdown could boost the odds of a rate cut from the Federal Reserve in December by giving the FOMC access to a wider range of economic data reports that had been postponed or canceled amid the shutdown. The Federal Reserve voted to cut interest rates for a second consecutive time in October, although Federal Reserve Chair Jerome Powell told reporters that a third rate cut at the FOMC’s December meeting was far from guaranteed.

In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it. Policy is not on a preset course.

Powell also explained that fewer reliable government economic data reports may present an issue for the FOMC as it attempts to chart out the proper course for the Fed at its December meeting. As Powell explained at the post-meeting press conference at the FOMC’s October meeting, a government shutdown heading into the December meeting could have been an argument “in favor of caution” where rate cuts were concerned.

I would say we’re not going to be able to have the detailed feel of things, but I think if there were significant or material change in the economy one way or another, I think we’d pick that up through this. So, in terms of how it might affect December, it’s really hard to say. […] If there is a very high level of uncertainty, then that could be an argument in favor of caution about moving. But we’ll have to see how it unfolds. 

The government shutdown led to the postponement or cancellation of several key economic data reports in October and early November. With an end to the shutdown on the horizon, some traders believe that the FOMC may be more willing to cut interest rates to 3.50-3.75% in December, which would be the third 25 bps rate cut of 2025. Safe haven assets like gold and silver tend to gain value when interest rates fall, since cutting interest rates often leads to higher inflation, an advantageous climate for safe haven assets. Per CME FedWatch, the probability of a December rate cut remained largely unchanged on Monday at 63.5%, down marginally from 66.8% on November 3rd. Forward expectations for a December rate cut appear much more confident that the FOMC will use upcoming data reports to justify another rate cut during the final Fed meeting of the year.

Aside from gains in the gold and silver markets, platinum-group metals increased in value on Monday. The spot price of platinum gained around $37 per troy ounce, while palladium prices increased by just over $34/ozt. The price gap between the two precious metals remained largely unchanged at around $150/ozt. Excitement surrounding China’s ambitious 2035 green energy goals is expected to remain a strong price driver for platinum, palladium, and silver heading into the first months of 2026.

Gold and silver both gained on Monday as the U.S. Senate pushed for an end to the record government shutdown. An end to the shutdown is expected to improve the probability that the FOMC will vote for a third consecutive 25 bps rate cut at the Federal Reserve’s December meeting. The price action favored silver, driving the gold-silver ratio lower. Platinum and palladium also gained on the day’s news. Upcoming economic data reports throughout November are expected to play a major role in the Fed’s decision-making process at its December meeting, which could drive precious metal prices higher or lower.