U.S. equity indices continued their climb in October, setting yet another round of record highs despite the ongoing government shutdown and trade tensions with China. Gold surged past $4,300 per ounce, marking a gain of more than 50 percent year-to-date and handily outperforming equity markets, while oil prices have traded in a range roughly between $58 and $70 a barrel over the past few months.
The Federal Reserve cut interest rates by a quarter of a percentage point, signaling a more neutral policy stance. Corporate earnings have generally been solid, adding support to market sentiment. On the geopolitical front, the first phase of a cease-fire in the Middle East, which is intended to end the two-year conflict, was viewed as meaningful progress. Still, volatility ticked up in the month as headlines surrounding U.S. – China trade negotiations hit social media.
The U.S. government shutdown has now stretched into day 34, heightening concerns about the economy’s overall health as millions of federal employees continue to miss paychecks. Reports of rising bankruptcies and loan delinquencies have added to worries about leverage in segments of the credit market and the potential stress on regional banks.
Gold remains in a powerful uptrend, buoyed by mounting central bank demand. Policymakers around the world appear increasingly uneasy about the U.S. dollar’s long-term status as a reserve currency amid growing geopolitical uncertainty. Moreover, the weaponization of dollar-based sanctions — including the freezing of foreign reserves and limits on financial access — has underscored gold’s appeal as a non-counterparty asset that cannot be seized or restricted in the same way as dollar holdings.