Gold prices rose nearly 17% in the third quarter, expectations of Fed rate cuts strengthened, and the risk of U.S. government shutdown increased

Basic news

On Wednesday (October 1, Beijing time), spot gold trading was around $3,860/ounce, and gold prices hit a record high of $3,871.61 on Tuesday. Investors are worried that the US government will be shut down soon and that poor employment data strengthened expectations for the Fed's interest rate cut. Gold rose 11.9% in September, the biggest monthly gain since August 2011, up 16.82% in the quarter; U.S. crude oil trading was around $62.50 per barrel, oil prices closed lower on Tuesday, investors were worried about oversupply, OPEC+ may plan to significantly increase oil production in November, and Iraqi Kurdistan's oil exports through Turkey recovered.

Stock Market

The three major U.S. stock indexes closed higher in fluctuating trading on Tuesday, with quarterly and monthly gains, even as investors fear that the U.S. government shutdown would delay the release of important economic reports and make the Fed's interest rate policy prospects unclear.

As investors have been betting on the Fed for some time, the S&P 500, the Nasdaq and Dow Jones Industrial Average have all risen for the second consecutive quarter. The S&P Index and the Dow Jones Industrial Average rose for the fifth consecutive month, while the Nasdaq rose for the sixth consecutive month.

U.S. President Trump warned Congressional Democrats that his administration would take "irreversible" actions if the federal government shuts down at midnight, including closing projects that are important to Democrats. While past government shutdowns have had limited impact on the market, some analysts warn that the shutdown could cause even greater damage given the delicate economic situation.

TuesdayEarlier, a U.S. Department of Labor report showed a slight increase in job openings in August, while recruitment and layoffs fell. Another data showed that US consumer confidence fell more than expected in September. The latest data does not imply a significant reduction in jobs.

However, Mark Luschini, chief investment strategist at Janney Montgomery Scott, said: "This is a very balanced market and may soon be tilted to either side." He said defensive sectors such as health care, major consumer goods, and more cyclical sectors such as industry are leading the market, showing a lack of "firm directional beliefs." "Maybe there will be some position adjustments before the government shutdown," Luschini said. "If this happens and continues until after Friday, there will be more important economic data that cannot be released, such as the employment report will not be released on Friday. This leaves investors a little confused about the actual situation."

The Dow Jones Industrial Index rose 0.18% to 46,397.89 points, a record closing high. The S&P 500 rose 0.41% to 6688.46 points; the Nasdaq rose 0.31% to 22660.01 points.

In September, the S&P 500 rose 3.53%, the biggest September increase since 2010. In the third quarter, the S&P 500 rose 7.79%, the largest third-quarter increase since 2020. The Nasdaq rose 11.24%, the biggest third-quarter gain since 2010, with the Dow rising 5.22%. In September, the Nasdaq rose 5.61%. The Dow Jones Industrial Average climbed 1.87%, the biggest increase since 2019.

The health care sector led the gains of 2.45% among the 11 major sectors of the S&P 500. The stock with the largest increase was Pfizer, which rose 6.8%. Earlier, Trump said Pfizer would lower the prices of all prescription drugs in the Medicaid Medicaid program in the United States and sell new prescription drugs at "Most Favored Nation" prices in exchange for tariff relief. Trump also said he expects other drugmakers to follow suit. This has driven other health care stocks to rise sharply.

Dow Jones Transportation Index fell 0.4%, with airlines leading the decline due to threats of government shutdowns. Southwest Airlines fell 2.6%, while United Airlines fell 2.2%.

In response to the shutdown, the U.S. Department of Transportation said that if government funds run out at midnight, more than 11,000 employees of the Federal Aviation Administration (about a quarter of their total) will be forced to take unpaid leave, while more than 13,000 air traffic controllers will be required to continue working unpaid until the shutdown is over.

Federal Vice Chairman Jefferson warned that the job market could face pressure without the support of the Fed, and Boston Fed Chairman Collins said she was open to further rate cuts.

Gold market

Gold prices rose on Tuesday, hovering near record highs, investors worried about the United StatesThe government is about to shut down, and poor employment data strengthens expectations for the Fed's interest rate cut.

Spot gold rose 0.3% to $3,843.43 per ounce, rebounding from an earlier decline in North America session. During the Asian trading period, gold prices once hit a record high of US$3,871.61. US gold futures for December delivery closed 0.5% higher, with a settlement price of US$3,873.20.

Independent metals trader TaiWong said: "Gold has once again shown extraordinary resilience, effortlessly regaining earlier lost ground after the unsatisfactory U.S. Department of Labor Vacancy and Labor Movement Survey (JOLTS) will not hinder another rate cut in a month. The looming partial shutdown of the U.S. government has increased uncertainty and has also exacerbated calls for 'buy gold'."

The U.S. job openings increased slightly in August, but the number of hiring declines in line with the sluggish labor market, which may drive the Federal Reserve to cut interest rates again next month, although consumer spending remains resilient.

Trades now see the possibility of the Fed cutting interest rates at its October meeting at a 97% chance, according to CME's FedWatch tool. Gold rose 11.9% in September, the biggest monthly gain since August 2011, with a quarterly increase of 16.82%.

The U.S. government is about to xn--xm-6d1dw86k.come to a halt, with Republicans and Democrats still stalemate and unlikely to reach an agreement before the midnight funding deadline.

Spot silver fell 1.1% to $46.42 an ounce, but climbed 17% in September. Platinum fell 2.7% to $1,576.75; palladium fell 1.5% to $1,249.37. Oil market

Oil prices closed lower on Tuesday, with investors worried about oversupply, OPEC+ may plan to significantly increase oil production in November, and Iraqi Kurdistan's oil exports through Turkey recovered.

The settlement price of Brent crude oil futures for November expiring on Tuesday fell 1.4% to $67.02 a barrel. The more active December contract settlement price was $66.03. The settlement price of U.S. crude oil futures was $62.37 per barrel, down 1.7%.

Three sources familiar with the talks said that as Saudi Arabia strives to regain market share, OPEC+ may speed up production growth in November at the meeting next Sunday, with production growth of 137,000 barrels per day in October. Two of them said that the eight OPEC+ member states may agree to increase production by 274,000 to 411,000 barrels per day in November, which is two to three times higher than the October increase.

Bloomberg News said OPEC+ is considering a 500,000 barrels per day increase. OPEC said in a post on X platform that these statements are xn--xm-6d1dw86k.completely inaccurate and misleading.

StoneX analyst Alex Hodes said: This (OPEC+) strategy could significantly squeeze profits from high-cost U.S. shale oil producers,It can force them to reduce production that has maintained at record levels.

The Iraqi Ministry of Petroleum said the crude oil pipeline from Kurdistan to Turkey was opened on Saturday, the first time in two and a half years after the parties reached a temporary agreement to break the deadlock.

U.S. President Trump has won support from Israeli Prime Minister Netanyahu for the U.S. peace proposal for Gaza, but Hamas's position is unclear.

U.S. crude oil production rose to 13.64 million barrels per day in July, a monthly high of 109,000 barrels per day higher than the historical record set in June, according to data released by the U.S. Energy Information Administration (EIA) on Tuesday.

Foreign exchange market

The dollar fell on Tuesday after previously released economic data was inferior to expectations, and investors were waiting for a possible upcoming U.S. government shutdown, which could affect the release of this week's non-farm employment report.

If the Republican and Democrats fail to reach a temporary agreement, U.S. government funding will expire at midnight local time on Tuesday.

Eugene Epstein, head of North American trading and structural products at Moneycorp in New Jersey, said that the market has basically digested the government's expectations of shutdown. The question is how long will the shutdown last? Will it last as the market currently expects, or will it evolve into a more serious situation? ”

U.S. President Trump warned Congressional Democrats on Tuesday that if the government shuts down at midnight, his administration will take "irreversible" actions, including closing some projects that are crucial to Democrats.

U.S. Labor and xn--xm-6d1dw86k.commerce Department said that if some government shutdowns occur, their statistical agencies will suspend data releases, including the highly-watched non-farm employment data in September.

Non-farm employment report is scheduled to be released on Friday, which is an important basis for the Federal Reserve's decision-making. If it is delayed, it may intensify market volatility due to rising uncertainty.

Elias Haddad, senior market strategist at Brown Brothers Harriman, wrote in a research note that the logic is that the government shutdown may prompt the Federal Reserve to be more dovish, and if the shutdown is short, the Federal Reserve will ignore its impact. But if it holds More than two weeks will increase the risk of economic downturn and increase the possibility of the Federal Reserve's adoption of a looser policy.

U.S. interest rate futures are currently expected to cut interest rates by 45 basis points for the rest of the year, with a 25 basis point cut from October, with a high probability of another drop before the end of the year.

In afternoon trading in New York, the dollar fell 0.5% against the yen to 147.85 yen, continuing the decline after the U.S. Bureau of Labor Statistics released mixed job vacancy and labor flow survey (JOLTS) data. The dollar rose 2.7% in the third quarter, its best quarterly performance since October 2024.

The report shows that job vacancy in the United States increased slightly in August, while recruitment declined, indicating that the labor market was weak. As of the last day of August, the labor demand indicator job vacancy increased by 19,000 to 7.227 million. The number of recruits in August decreased by 114,000 to 5.126 million; the number of layoffs decreased by 62,000 to 1.725 million.

The US dollar index fell 0.1% to 97.78, but rose 1.1% in the September quarter, its biggest quarterly gain since January this year.

The euro rose 0.1% against the dollar to $1.1740, but fell 0.4% in the third quarter, the biggest quarterly decline since October 2024.

The US dollar is also dragged down by the consumer confidence index. The consumer confidence index released by WorldEngineering fell 3.6 points in September to 94.2, while economists surveyed by Reuters had previously expected 96.0.

In the yen, investors digested the summary of the Bank of Japan's September meeting, which discussed the possibility of a recent interest rate hike. The market shows that traders are betting on a 60% chance of interest rate hikes in December.

Traders of the Netherlands International Group (ING) said that if the U.S. government shuts down, selling the U.S. dollar to buy the Japanese yen may become a hot deal. The U.S. dollar/yen rose 0.7% in September, but has fallen nearly 6% so far in 2025 as investors believe Japanese interest rates may rise slowly while U.S. rates tend to decline.

Francesco Pesole, a foreign exchange strategist at Dutch International, said that a lower USD/JPY may remain a favored deal during the government shutdown. During the 2018-19 government shutdown, the US dollar/JPY fell 1.5%. According to our model, the USD/JPY is still above the short-term reasonable valuation by about 1%.

The Australian dollar rose 0.6% to $0.6615 in the late trading after the RBA kept interest rates unchanged as expected. The central bank said recent data showed that inflation may be higher than expected in the third quarter and the economic outlook remains uncertain. The RBA has cut interest rates three times this year. The Australian dollar rose 0.5% in the third quarter.

In Europe, the pound has not been affected by data such as slowing economic growth in the UK and expanding current account deficit. Data shows that the UK's economic growth slowed to 0.3% in the second quarter of this year, while the current account deficit expanded to 3.8% of GDP in the three months to the end of June, up from 2.8% in the first quarter.

The pound rose 0.1% to $1.3450 in the late trading and also rose slightly against the euro, with the euro falling 0.2% to 0.8728 pounds. The GBP/USD fell 2% in the third quarter, the worst quarter since October 3 last year.

International News

The Democrats promoted a symbolic temporary spending draft in the U.S. House of Representatives, but were obstructed by Trump's camp.

At noon on September 30, Eastern Time, the Republicans of the U.S. House of Representatives obstructed Democratic members to promote the latter version of the draft legislation on temporary spending, which means that the cross-party differences on the temporary spending draft on Capitol Hill will trigger the U.S. government to suspend late that night (12:00 Beijing time on October 1).

Iranian President: The United States has no intention to resolve the Iranian nuclear issue through negotiations

On September 30, local time, Iranian President Pezekichiyan said at a meeting that what US officials did on the Iranian nuclear issue showed that he "has no intention to resolve the issue through negotiation and fair logic, but attempted to increase pressure on the Iranian people and create domestic dissatisfaction by launching the 'rapid sanctions' mechanism." Pezeshiziyang stressed that relying on the concerted efforts and unity of all parties in Iran, insisting on ensuring people's livelihood as the top priority, while xn--xm-6d1dw86k.compressing spending, optimizing energy management, and expanding trade with neighboring countries, these insidious plots will eventually fail.

Hamas: Will study the US "20-point plan" and formally reply

In response to the US's plan to end the Gaza conflict, the Palestinian Islamic Resistance Movement (Hamas) stated on September 29 local time that the organization has received the "20-point plan" proposed by US President Trump on ending the Gaza conflict, and will conduct careful study. Sources from Hamas said on the 29th that Qatari Prime Minister and Foreign Minister Mohammed and Egyptian Intelligence Director Rashad met with the Hamas negotiating delegation in Doha, the capital of Qatar, that day and handed over to the US's "20-point plan." The Hamas negotiating delegation said it would study the plan and make a formal reply.

Bank of England Deputy Governor Breeden warned that high interest rates risks further highlight internal differences

Differences in the Bank of England internal views emerged further on Tuesday, with the bank's deputy governor Sarah Breeden warning that keeping interest rates at high levels for too long will pose a threat to the economy. Breeden said that the new round of inflation uptrend is suppressed by maintaining borrowing costs within a restricted range, accompanied by risks in the other direction. She downplayed several factors that could keep price increases high, including recent rises in household inflation expectations, but did not say whether the Bank of England should cut interest rates at its next meeting in November. Just hours ago, BoE external xn--xm-6d1dw86k.committee member Catherine Mann warned that a stubborn inflation scenario that officials had repeatedly pondered was emerging, but she did not xn--xm-6d1dw86k.completely rule out the possibility of further rate cuts. The above remarks show that the Bank of England is very different on how to deal with inflation rising to nearly twice its 2% target. The last rate cut in August was only passed with a weak majority, and the market believes that there is little possibility of taking action again before the end of the year. Breeden supports the latest rate cut, while Mann is one of the minority voted to remain in the process.

The U.S. consumer confidence index hits its lowest level since April

A report released by the American research institution World Federation of Large Enterprises on September 30 showed that the U.S. consumer confidence index in September was 94.2, down 3.6 points from August, setting the lowest level since April. Among the xn--xm-6d1dw86k.components of the index, the consumer's assessment of current business and employment market conditions fell 7 points to 125.4. The consumer expectation index, reflecting short-term income outlook, business and employment market environment, fell back to 73.4, significantly below the critical point of 80 that normally shows a recession. The report shows that the proportion of respondents who believe that job opportunities are "adequate" fell to 26.9%, down more than 3 percentage points from August, while the proportion of respondents who believe that "work is difficult to find" remained at 19.1%. In addition, people are more pessimistic about their financial situation, with views on the current financial situation showing their biggest monthly decline since July 2022. "Consumers feel far less optimistic about business conditions than they do in recent months, and their feelings about current employment conditions have fallen for the ninth consecutive month, reaching new lows in years," said Stephanie Gicshare, senior economist at the agency. Experts believe that labor market stability is an important consideration as Fed officials consider the next rate trend. The market generally expects that the Federal Reserve will lower the benchmark interest rate by 0.5 percentage points by the end of the year.

Currently more than 150,000 U.S. federal employees resigned at the end of September

According to multiple media reports, about 154,000 U.S. federal government employees have accepted the conditions issued by this federal government and will officially resign on September 30. Reuters said this means 2025 will be the year with the largest number of resignations from the U.S. government since the end of World War II. After Republican President Donald Trump took office in January, he instructed entrepreneur Elon Musk to lead the "District of Government Efficiency" to cut federal agencies and employees on a large scale. According to the Washington Post, about 154,000 people who originally served dozens of federal agencies accepted the federal government's plans and voluntarily resigned under certain economic xn--xm-6d1dw86k.compensation conditions, and officially terminated their employment relationship with the federal government on September 30, the end of this fiscal year. According to the U.S. Personnel Administration, many people have left their posts several months ago and are actually on "paid leave" during this period. Reuters quoted several trade unionists and experts in the field of government governance on the 30th as saying that as these employees leave, "a large amount of professional knowledge and skills of the US federal government will also be lost."

Source: OPEC+ will consider a bigger increase in oil production

According to two people familiar with the matter, OPEC+ may consider increasing oil production by 411,000 barrels per day in November at its meeting on Sunday, as rising oil prices prompted the organization to seek to regain more market share. OPEC+ has reversed its previous production cut strategy and has raised its quota by more than 2.5 million barrels per day, accounting for about 2.4% of global demand, under pressure from U.S. President Donald Trump to lower oil prices, to increase market share. If the production increase of 411,000 barrels per day in November, it will be triple the increase of 137,000 barrels per day in October. The third source said that the increase in November could be as high as 500,000 barrels per day, and the final decision has not been made.

Domestic News

This year's National Day and Mid-Autumn Festival holiday, civil aviation passenger transport volume may hit a record high. There are still low-priced air tickets to find.

Civil Aviation Administration PreliminaryAccording to the survey, the number of civil aviation passengers during the National Day and Mid-Autumn Festival this year will reach 19.2 million, an increase of 3.6% year-on-year, setting a record high. Travel demand is hot, airlines are steadily increasing their capacity and stabilizing air ticket prices. However, the prices of air tickets for popular routes still have significantly increased. For some popular routes, there are only a small number of non-remain tickets for direct flights on October 1, and currently only full-price tickets for direct flights on October 6-8 are available. But from October 4 to 5, it only costs more than 700 yuan to Shenzhen to Urumqi, which is only one-quarter of the air ticket price on October 1. In addition, the ticket price of Shenzhen to popular destinations such as Kunming and Haikou is only more than 200 yuan. According to the manager of a travel platform's vacation store, there are still some relatively low-priced air tickets during the festival, and you can find a gap.

The above content is all about "[XM Foreign Exchange]: Gold prices rose nearly 17% in the third quarter, expectations of the Federal Reserve's interest rate cuts have been strengthened, and the risk of the US government shutdown has increased." It was carefully xn--xm-6d1dw86k.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your transactions! Thanks for the support!

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