Gold is trading above $3,850 an ounce as investors' concern grows over a US government shutdown.
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The price of gold climbed to a new record on Monday, rising above $3,850 an ounce in the afternoon in Europe, up more than 1% on the day.
Precious metals across the board surged, fuelled by a weak dollar and high uncertainty around funding for the US federal government.
On Monday, US President Donald Trump and the Republican Party are meeting with Democrats to discuss a short-term spending bill to avoid a government shutdown on Tuesday. Republicans need at least seven votes from Democrats to pass the legislation.
Uncertainty is high, which historically sees investors flocking into so-called safe-haven assets such as gold. The precious metal is a more stable option in turbulent times when other asset classes are far more volatile.
So far this year, gold has shown itself to be an investor favourite amid increased geopolitical tensions and trade uncertainties. Since January, the precious metal has gained over 45%, rising from $2,669 an ounce.
Other factors are also supporting gold prices, including expectations of further rate cuts from the Federal Reserve. On 17 September, the Fed lowered its target range for its main lending rate to 4% - 4.25%, and officials indicated that there could be two more rate cuts this year.
Lower rates tend to weaken the US dollar, in which gold is denominated, increasing the metal's appeal. This is particularly the case when other interest-bearing assets like bonds and savings accounts offer lower yields, following rate cuts.
“Gold prices continue to mark new records, with expectations for further rate cuts from the Fed supportive, given the precious metal does not offer income," said Russ Mould, investment director at AJ Bell.
"Now above $3,800, gold has also been boosted by central bank buying over several years, weaker demand for traditional safe havens like US government bonds driven by concerns over US deficits and trade policy, dollar weakness and geopolitical tensions, including conflicts in the Middle East and Ukraine," Mould added.
"The threat of a shutdown in Washington, as policymakers engage in tense negotiations ahead of a deadline at midnight on Tuesday, is yet another factor driving support for gold."
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