Gold, Treasuries Shine As Investors Flock To Safe Havens Amid US Government Shutdown Worries

Global investors are rushing to traditional safe havens after the US government's first shutdown in nearly seven years threw financial markets into a spell of uncertainty. The political deadlock in Washington, which halted all but essential federal services after Congress missed its midnight funding deadline, is disrupting the release of key economic data.

With government offices closed, investors will not get updates this week on jobless claims, factory orders, or September's hiring report — figures that typically guide Wall Street's forecasts for growth and the Federal Reserve's next policy moves. The absence of these signals is expected to heighten volatility across asset classes.

For now, gold is emerging as the winner. Prices have soared to an all-time high near $4,000 per ounce and are expected to retain their shine if the impasse drags on. As of 6:45 p.m., the metal is trading 0.25% at $3,868.83.

Analysts say part of the rally is linked to the dollar's weakness: the greenback has historically retreated during shutdowns. According to ING Bank, a further slide in the dollar could bolster the Japanese yen and even the euro, reinforcing safe-haven flows away from the US currency.

Bullion has soared more than 48% this year, putting it on track for the biggest annual gain since 1979. Monthly ETF inflows in September were the largest in three years, according to data compiled by Bloomberg.

US Treasuries, particularly at the long end, are also holding strong. Investors often turn to government bonds in times of stress, betting on weaker growth prospects. This shutdown is no exception.

"Coupon and debt service payments are not at risk," Monica Guerra, head of US policy at Morgan Stanley Wealth Management, wrote in a note reported by Bloomberg. "Given high yields, US Treasuries remain attractive, and we encourage investors sensitive to government shutdown risk to opt for increased US Treasury exposure."