Gold pushes past $3,900/oz on U.S. rate cut bets, political uncertainty

Gold futures surged again Monday, pushing ever closer to the psychologically important $4,000/oz threshold just seven months after first trading above the $3,000 mark, as expectations for lower interest rates in the U.S. as well as political uncertainty in the U.S. and Europe drove safe-haven demand higher.

Gold's rally comes as the U.S. federal government shutdown stretches into its second week, delaying the release of key economic data including September’s jobs report, while the resignation of French Prime Minister Sebastien Lecornu took financial markets by surprise.

Meanwhile, investors are pricing in two more interest-rate cuts in October and December, a scenario that favors non-yield-bearing assets like bullion.

"We see both fundamental and momentum-based reasons for gold to rally further, and now expect bullion to reach $4,200/oz by the end of this year," UBS analysts said in a note.

But the commodity team at Bank of America - among the first to highlight the $4,000 target early this year - now says the yellow metal looks slightly overbought, pointing to a likely consolidation or correction in Q4.

Front-month Comex gold (XAUUSD:CUR) for October delivery closed +1.7% to $3,948.50/oz, an all-time high settlement, and front-month Comex October silver (XAGUSD:CUR) finished +1% to $48.082/oz, its highest close since April 29, 2011.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (NYSEARCA:IAU), (NYSEARCA:NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (RING), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)