Gold prices had a steep rise on Monday, climbing above $4,100 per ounce for the first time in two weeks as hope surrounding an end to the US government shutdown and speculation over new fiscal incentives bolstered investor sentiment.
The metal rose more than 2%, extending a rebound that began late last week. Traders flew to gold amid renewed expectations of government spending and the possibility of fresh tax relief, reigniting demand for inflation hedges and safe-haven assets.
Fiscal Hopes and ‘Run-It-Hot’ Policy Lift Sentiment
The rally took off after President Trump floated the idea of a “tariff rebate” or dividend payment to Americans, a proposal Treasury officials described as potentially arriving in the form of a tax credit. The move signaled an expansion of fiscal policy at a time when inflation remains elevated — a combination historically favorable to gold.
Analysts said investors are once again bracing for a “run-it-hot” policy stance, with fiscal expansion continuing even as the Federal Reserve keeps rates elevated. That backdrop has made gold particularly attractive as a hedge against both inflation and currency debasement.
Shutdown Resolution and Rate-Cut Speculation Add Fuel
Progress in Congress toward ending the record-breaking government shutdown also lifted sentiment, raising hopes for a reopening as early as this week. A resolution would allow the release of delayed economic data, including key inflation metrics that could influence the Fed’s December rate decision.
Gold tends to benefit in easing environments, where lower yields reduce the opportunity cost of holding non–interest-bearing assets. With investors now pricing in another potential rate cut this year, demand for precious metals has strengthened alongside Treasury and ETF inflows.
A Stellar Year for the Metal
Gold is up approximately 57% year to date, on track for its strongest performance since 1979. The rally has been fueled by several key factors:
- Record central bank buying, particularly from emerging economies diversifying reserves.
- Strong demand for coins and bars among retail investors seeking inflation protection.
- Rising ETF inflows, as institutional funds rotate from equities into hard assets.
While some analysts have suggested gold may have already peaked following October’s record above $4,350, others remain bullish. Many point to ongoing policy uncertainty and fiscal expansion as reasons for continued upside in 2026.
Investor Outlook Remains Bullish
Market strategists at major investment firms continue to view gold as an essential hedge within diversified portfolios. Several now forecast the metal could test $4,200 per ounce over the next 12 months, with upside potential toward $4,700 if inflation or political instability intensify.
“The narrative remains one of resilience,” one strategist said. “Even with yields high, gold’s role as a defensive and inflation-sensitive asset has rarely been stronger.”
Looking Ahead
Investors will watch closely for progress on the shutdown bill and any follow-up comments from the Federal Reserve ahead of its December meeting. Traders are also monitoring whether fiscal stimulus discussions evolve into formal legislation — a key factor that could shape the next leg of gold’s rally. With sentiment improving and government spending expectations rising, gold’s momentum may hold through the end of the year, reinforcing its place as one of 2025’s standout assets.