Gold and silver break higher as US debt concerns eclipse shutdown relief

Fiscal trajectory re-enters focus

A potential end to the shutdown matters for several reasons. At the surface level, it would allow key data releases to resume and give the Federal Open Market Committee a clearer picture of underlying activity ahead of its December meeting. The market continues to assign a meaningful probability to a rate cut next month, and the resumption of normal data flow could reinforce that expectation — especially after last week’s weaker-than-expected US employment and consumer sentiment indicators. More critically, a reopening would pull the spotlight back onto the US fiscal trajectory — an issue markets are finding increasingly difficult to dismiss.

The US is already running a deficit close to 6% of GDP at a time when the economy is showing signs of fatigue. Consumer sentiment, as captured in the latest University of Michigan survey, has weakened again, and forward-looking components of activity are softening. In this context, the announcement of a USD 2,000 "tariff dividend" to be distributed to low-income households — effectively funded by tariff proceeds and additional borrowing — sits uncomfortably. Injecting more cash into an economy wrestling with still-sticky inflation, slowing demand, and elevated rates risks deepening rather than resolving macro imbalances.

Bond market yields are higher in early Monday trading, a move that increasingly reflects concerns about fiscal sustainability and the Treasury’s expanding financing requirements. Rising yields driven by fiscal anxiety, rather than economic strength, have historically been supportive for investment metals. They reflect unease rather than confidence, and that nuance continues to underpin gold and silver’s resilience even on days when nominal yields rise.

Technical outlook: gold and silver

Against this backdrop, gold has pushed above resistance at USD 4,045 to challenge the 38.2% retracement of the October correction around USD 4,075 and currently the 21-day moving average - a short-term momentum indicator.

Silver is performing even more forcefully after clearing resistance at USD 49.30 to focus on USD 50, the next major level both from a psychological marker and a technical barrier. Elevated volatility in silver has been a recurring theme this year, but the broader pattern of strong demand, tightness in parts of the physical market, and speculative rebuilds has kept the medium-term trend intact.

For precious metals, the broader environment remains favourable. Gold and silver thrive in periods where macro uncertainty broadens beyond inflation and monetary policy into fiscal credibility and political risk. With bond markets increasingly pricing discomfort rather than optimism, and with the Fed likely to lean more dovishly should incoming data remain weak, the investment case for metals remains well-anchored.

Supreme Court tariff risk and market consequences

Should the US Supreme Court reject Trump's tariffs, markets would likely see increased short-term volatility and some notable shifts with a removal being akin to a tax cut improving stock market sentiment while lowering the geopolitical temperature. However, the decision would worsen an already challenging US debt situation which as mentioned has been a key source of support for precious metal investments in the past couple of years. 

The consolidation phase that followed the May record peak near USD 3,500 lasted around four months before momentum returned in late August, lifting gold to USD 4,400 and silver to USD 54.50, followed by corrections of 11.3% and 16.4% respectively. While we maintain that gold could approach USD 5,000 within the next 12 months and silver USD 65, we are more cautious about calling for an immediate return to the highs. Should the market nevertheless push straight back up, it would signal exceptionally strong underlying demand and a broader shift in how investors interpret global risks.