Gold prices jumped in European trading on Monday to their highest level in two weeks, extending gains for a second consecutive session amid strong safe-haven demand around the 4,000-dollar-per-ounce mark, supported by the current weakness in the U.S. dollar.

The U.S. Senate is set to hold additional votes later today on a bipartisan preliminary deal that could end the longest government shutdown in U.S. history, now extending beyond 40 days.

Price Overview

• Gold prices rose 2.1% to 4,085.26 dollars, the highest since October 27, up from an opening level of 4,000.57 dollars, after hitting an intraday low of 3,999.77 dollars.

• On Friday, gold gained 0.6%, marking its second advance in the last three sessions, supported by ongoing dollar weakness.

• The metal posted a weekly loss of less than 0.1% last week, its third consecutive weekly decline.

U.S. Dollar

The U.S. Dollar Index fell 0.1% on Monday, extending losses for a fourth straight session as the greenback continued to weaken against major and minor currencies.

On Sunday, the U.S. Senate appeared ready to move forward with legislation to reopen the federal government and end the 40-day shutdown, which has sidelined federal employees, delayed food assistance, and disrupted air travel.

Further votes are expected later today to finalize the bipartisan agreement, which includes funding measures through January.

U.S. Labor Market

With the monthly nonfarm payrolls report delayed due to the government shutdown, traders have turned to private-sector data showing job losses in October across government and retail sectors.

Cost-cutting measures and increased reliance on artificial intelligence technologies have led to a sharp rise in announced layoffs.

Westpac Bank noted in a research report that Challenger data indicate a significant jump in U.S. job cuts, signaling a potential slowdown in the labor market.

U.S. Interest Rates

• A survey published Friday showed U.S. consumer confidence fell to its lowest level in nearly three and a half years in early November amid concerns over the economic fallout from the record-long government shutdown.

• According to CME Group’s FedWatch tool, markets currently price a 65% probability of a 25-basis-point rate cut in December, with a 35% chance of rates remaining unchanged.

• Investors are closely monitoring comments from Federal Reserve officials to reassess rate expectations in the absence of official government data.

Gold Outlook

• Tim Waterer, chief market analyst at KCM Trade, said gold is seeing strong buying momentum at the start of the week, rising on expectations of a potential rate cut next month, even though the Fed has downplayed that likelihood.

• He added that as the U.S. government shutdown nears its end, greater clarity should return to key economic indicators, which have weakened noticeably since the start of the closure.

SPDR Fund

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 1.71 tons on Friday, marking a second consecutive daily increase and bringing total holdings to 1,042.06 metric tons — the highest level since October 24.

The euro rose in European trading on Monday against a basket of major currencies, extending its gains for a fourth consecutive session versus the U.S. dollar, supported by continued weakness in the greenback as investors awaited key Senate votes aimed at ending the longest government shutdown in U.S. history.

A slowdown in inflation across Europe during October eased price pressures on European Central Bank policymakers and revived expectations of an interest rate cut in December.

Price Overview

• EUR/USD climbed 0.15% to $1.1579, up from the day’s opening level of $1.1562, after touching an intraday low of $1.1542.

• The euro ended Friday’s session up 0.15% against the dollar, marking its third straight daily gain amid a rebound from three-month lows.

• On a weekly basis, the euro advanced 0.25% against the dollar — its first weekly rise in three weeks — as selling pressure on the European currency eased.

U.S. Dollar

The U.S. Dollar Index slipped 0.1% on Monday, extending losses for a fourth consecutive session and reflecting continued weakness in the greenback against both major and minor peers.

The decline came amid concerns that the Senate might fail to approve a preliminary deal to end the longest government shutdown in U.S. history, with additional votes expected later in the day.

European Interest Rates

• Recent data showed that headline inflation in the eurozone slowed in October in line with expectations, while core inflation held steady — reducing pressure on ECB policymakers.

• Following the release, money markets priced in a higher probability of a 25-basis-point rate cut by the ECB in December, rising from 10% to 25%.

• Investors now await further economic indicators from across Europe, as well as comments from ECB officials, to reassess the outlook for monetary policy.

The Japanese yen weakened in Asian trading on Monday against a basket of major and minor currencies, extending losses for a second consecutive session versus the U.S. dollar, as the greenback gained on optimism surrounding an end to the longest government shutdown in U.S. history.

Japanese Prime Minister Sanae Takaichi announced that her government plans to abandon its current annual fiscal target in favor of a new multi-year spending framework — a move that could pave the way for a new era of expansionary fiscal policy aimed at supporting Japan’s sluggish economy.

Price Overview

• USD/JPY rose 0.4% to ¥154.03, up from Friday’s closing level of ¥153.41, after touching an intraday low of ¥153.40.

• The yen ended Friday down 0.25% against the dollar following weak household spending data.

• For the previous week, the yen gained about 0.4% against the dollar, marking its first weekly rise in three weeks on renewed hopes of a December rate hike by the Bank of Japan.

U.S. Dollar

The U.S. Dollar Index rose 0.2% on Monday, heading for its first gain in four sessions, reflecting renewed strength in the greenback against major and minor peers.

The rebound followed increased optimism that the longest U.S. government shutdown in history could soon end, after the Senate approved the first stage of a bipartisan deal to reopen the federal government with funding measures extending through January.

Sanae Takaichi’s fiscal shift

Takaichi’s remarks at the end of last week sparked wide debate across financial circles after she said the government would replace its annual fiscal balance target with a broader, multi-year spending objective.

The shift signals Tokyo’s move away from its long-standing commitment to achieving a balanced budget by specific annual deadlines — a departure seen as loosening Japan’s traditionally strict fiscal discipline.

Takaichi argued that the annual framework is no longer suitable amid Japan’s multiple economic challenges, including weak growth, slowing industrial output, and rising living costs. She said the new approach would grant greater flexibility in managing fiscal policy over the medium term.

Analysts noted that while the decision could usher in a phase of fiscal expansion to boost growth, it also poses new challenges for the Bank of Japan in coordinating monetary policy with a more accommodative fiscal stance.

Japanese Interest Rates

• Although BOJ Governor Kazuo Ueda recently delivered his strongest signal yet that an interest rate hike could come in December, markets remain skeptical of the central bank’s gradual approach.

• Current market pricing suggests roughly a 50% chance of a 25-basis-point rate hike at the December meeting.

• Investors are awaiting upcoming data on inflation, unemployment, and wage growth in Japan to reassess those expectations.

Democratic promises to lower energy costs helped deliver a comfortable win in last Tuesday’s elections, as several party candidates pledged to freeze utility rates. Democrats also captured seats on Georgia’s Public Service Commission for the first time in nearly two decades — a sharp rebuke to regulators who had approved six electricity rate hikes over the past two years.

As a result, customers of Georgia Power now pay an average of $516 more per year than they did two years ago. But Georgia is not an isolated case: electricity price hikes have become a hot political issue nationwide, with over 60% of Americans saying utility bills are one of their main financial burdens.

After years of relative stability, U.S. electricity prices have surged, adding to the financial strain of millions already struggling with inflation. Since 2021, electricity prices have jumped 36%, an average annual increase of nearly 7% — three times higher than the 12% rise seen between 2009 and 2020.

Yet the surprise, according to the U.S. Energy Information Administration (EIA), is that prices are likely to keep climbing. The agency projects that residential electricity rates will reach 17.7 cents per kilowatt-hour by 2026, up from 16 cents in 2024.

Soaring demand: the core driver behind the rise

Behind these increases lies what the EIA calls a “chaos dynamic” — a sudden and sustained surge in electricity demand.

After nearly 14 years of stagnant consumption growth (from 2008 to 2021, averaging just 0.1% annually), U.S. electricity demand jumped 3% in 2024 — the fifth-largest yearly increase this century.

This spike is largely driven by the rapid expansion of new data centers across regions managed by the Electric Reliability Council of Texas (ERCOT) and the PJM Interconnection system.

A 2023 report by Grid Strategies titled *“The Era of Flat Power Demand Is Over”* noted that U.S. grid planners — from utilities to regional transmission organizations (RTOs) — have nearly doubled their five-year growth forecasts.

For the first time in decades, nationwide electricity demand is expected to rise as much as 15% over the next ten years, fueled by:

* The proliferation of AI-driven data centers

* Electrification of transport and heating

* Expansion of battery manufacturing

* Industrial incentives for semiconductor and advanced technology production

The Electric Power Research Institute (EPRI) estimates that data centers could consume up to 9% of total U.S. electricity by the end of this decade — up from roughly 1.5% today — due to the energy-intensive nature of generative AI.

Heavy reliance on natural gas adds further pressure

Alongside the demand boom, America’s heavy dependence on natural gas for power generation has left it vulnerable to rising energy costs.

Natural gas now accounts for 40% of the nation’s electricity mix. Over the past year, benchmark Henry Hub prices surged about 60% to $4.33 per million British thermal units (MMBtu).

The EIA expects prices to climb further, reaching $4.90 per MMBtu in 2026 versus $4.00 in 2025, driven by robust demand for liquefied natural gas (LNG) exports and slowing domestic production growth.

U.S. LNG export capacity is projected to rise roughly 75% by 2030 based on currently approved projects — from around 17 billion cubic feet per day today to about 30 billion cubic feet per day by the end of the decade.

A coming LNG surplus may ease prices longer-term

Despite short-term price pressures, the rapid expansion of U.S. LNG output could eventually help reduce costs.

TotalEnergies CEO Patrick Pouyanné recently warned of a looming oversupply of U.S. LNG, following NextDecade Corp.’s final investment decision (FID) on Train 4 of its Rio Grande LNG project in Texas — which will bring the facility’s total planned capacity to 48 million tons per year.

Pouyanné said the U.S. is building “too many” liquefaction plants, potentially creating a long-term glut if all projects proceed as scheduled.

Train 4 alone will add about 6 million tons of annual capacity, bringing the total under construction to 24 million tons. NextDecade also said Train 5 is nearing an FID, while Trains 6 through 8 remain in development and permitting stages.

The construction cost of Train 4 is estimated at around $6.7 billion, financed 40% through equity and 60% through debt, with TotalEnergies holding a 10% stake in the project.