Gold Breaks $3800 on US Shutdown Fears, Trump Tariffs Loom

The increasing prospect of a US government shutdown has pulled the dollar lower and propelled gold to over $3,800 for the first time. Today, US President Trump will meet with congressional leaders from both parties, though expectations for a breakthrough remain slim. With political brinkmanship in Washington weighing on sentiment, investors are also bracing for fresh tariffs set to take effect this week and a packed calendar of economic data and central bank speakers.

Equities

The FTSE 100 closed 0.8% higher on Friday, supported by gains in banks, energy stocks and leisure companies. For the week, the blue-chip index advanced 0.74%, while the mid-cap FTSE 250 rose 0.4% on both the day and the week. InterContinental Hotels Group led the FTSE 100 after JPMorgan issued a double upgrade to overweight from underweight, sending its shares up 4% on Friday.

Banking stocks also contributed strongly, with HSBC up 1.3% and NatWest up 3% following positive sector commentary from Citigroup strategists. Energy stocks moved higher alongside rising oil prices, with BP up 1.2% and Shell gaining 1.3%. AstraZeneca edged 0.6% higher after the company announced that it will sell diabetes and asthma drugs directly to cash-paying US patients at discounts of up to 70%. Babcock rose 3.2% after Berenberg lifted its price target.

In New York, Wall Street closed higher on Friday but all three major indices ended the week in the red. The Dow Jones rose 0.65% to 46,247.29, the S&P 500 gained 0.59% to 6,643.70, and the Nasdaq Composite added 0.44% to 22,484.07. Over the week, however, the Dow slipped 0.2%, the S&P 500 fell 0.3% and the Nasdaq dropped 0.7%.

Among individual US companies, Electronic Arts was the standout mover, surging 14.9% on Friday after reports suggested the videogame publisher was in advanced talks to go private. Truck maker Paccar climbed 5.2% after President Donald Trump announced new tariffs, including levies on heavy-duty trucks, a sector in which Paccar manufactures most of its vehicles domestically. Pharmaceutical firm Eli Lilly rose 1.4% after being included in the tariff announcement, which targeted branded pharmaceutical imports. Elsewhere, Costco slipped 2.9% on Thursday after posting its quarterly results.

Tariffs also extended beyond US markets, with Trump unveiling duties on a range of imported goods including furniture and pharmaceuticals. In the UK, officials said they were seeking a favourable outcome on the measures, noting that AstraZeneca could be relatively well positioned due to additional investment commitments in the United States.

Forex & Commodities

The US dollar slipped as political uncertainty over a potential government shutdown weighed on sentiment. The dollar index eased to 97.95, while the greenback moved down to ¥148.9. The euro was slightly higher at $1.173, though it remained within its recent trading band of $1.165 to $1.192.

Gold extended its rally, hitting a new all-time high early this morning at $3,814 per ounce, supported by the weaker dollar and growing expectations of further Federal Reserve rate cuts later this year. Other precious metals also strengthened, with silver trading above $47.00 per ounce, platinum at $1,624 per ounce and palladium at $1,295 per ounce.

Oil prices fell at the start of trading on Monday after crude shipments resumed from Iraq’s Kurdistan region to Turkey for the first time in two and a half years. Brent was down at $69.70 a barrel by 06:30 GMT, while US crude traded at $65.23. The resumption followed an agreement between Baghdad, the Kurdistan regional government and international producers. The restart comes ahead of an OPEC+ meeting next Sunday, where members are expected to approve an additional output increase of at least 137,000 barrels per day.