Oil prices hit 16-week lows, U.S. government shutdown triggers safe-haven demand, gold price 3,900 mark is close

Basic news

On Thursday (October 2 Beijing time), spot gold trading was around $3,860/ounce, and gold prices hit a new record high on Wednesday to $3,895.28/ounce, boosted by the weak dollar and the U.S. government shutdown, while weak employment data strengthened the market's expectations of the Federal Reserve's interest rate cut this month; U.S. crude oil trading was around $61.70/barrel, and oil prices fell on Wednesday, hitting a 16-week low as the U.S. government shutdown intensified market concerns about the global economy. At the same time, traders expect more oil supply to the market as OPEC+ plans to increase production next month.

Stock Market

Major U.S. stock indexes closed higher on Wednesday, with the health care sector gaining the most, and investors ignored weaker than expected private employment data and uncertainty related to the first day of the U.S. federal government shutdown.

If the government has not reopened the door before Friday, the U.S. Department of Labor’s September employment report is expected to be postponed, and investors are closely following the ADP National Employment Report.

ADP data shows that private jobs fell by 32,000 in September, weaker than the increase of 50,000 by economists. The revised figure in August decreased by 3,000, with the previous value of 54,000.

In other economic data, data from the Institute of Supply Management (ISM) showed that the U.S. manufacturing industry recovered slightly in September.

The three major U.S. stock indexes opened low and rose. The healthcare sector, which has the largest gains among the 11 major sectors of the S&P 500, was driven by the rise in pharmaceutical www.xmtraders.companies.

The health care sector began to rebound on Tuesday, beforeSwitzerland and U.S. President Trump announced an agreement. Pfizer agreed to lower the price of prescription drugs in Medicaid in exchange for tariff reductions. Trump said he expects more pharmaceutical www.xmtraders.companies to follow suit. "Wednesday was the catalyst for the healthcare sector," said Lara Castleton, head of U.S. portfolio construction and strategy at Janus Henderson Investors, which lags the market so far this year and may be time to rebound. "People are not deliberately avoiding health care stocks, but their capital allocation in this sector is not as much as they are in the technology sector and all the popular AI sectors."

The Dow Jones Industrial Average rose 0.09% to 46,441.10 points; the S&P 500 rose 0.34% to 6,711.20 points; and the Nasdaq rose 0.42% to 22,755.16 points.

The S&P 500 technology sector provided the second biggest boost to the index, with Micron soaring 8.9% and the Philadelphia Semiconductor Index up 2%. The largest increase in the healthcare sector is Biogen, up 10.9%.

Castleton noted that stock investors seem to disapprove of the uncertainty brought about by the government shutdown. Historically, the market has often performed resiliently during government shutdowns. A Deutsche Bank report shows that the S&P 500 has risen during the past six government shutdowns. Stock indexes also rose during the last government shutdown from the end of 2018 to the beginning of 2019.

Although the materials sector overall performed weakly, Lithium Americas Corp's U.S. listed stock rose 23.3%. The U.S. Department of Energy already owns a 5% stake in Lithium Americas and holds a 5% stake in the www.xmtraders.company's joint venture with General Motors. Gold prices soared to record highs on Wednesday, boosted by a weak dollar and a safe-haven demand triggered by a weak US government shutdown, while weak employment data reinforced expectations for the Fed's interest rate cut this month.

Spot gold rose 0.1% to $3,861.77 per ounce, hitting a record high of $3,895.09 for the session. The settlement price of US December gold futures rose 0.6% to $3,897.5.

Marex analyst Edward Meir said, "The dollar is under pressure. Usually when the government shuts down, the market sentiment towards the United States will become very negative." He added that the dollar and U.S. stock markets are one of the victims of the shutdown.

He pointed out that the weak ADP employment report is also negative for the dollar, with the economic slowdown and lower interest rates being good for gold. In September, the number of private jobs in the United States decreased by 32,000, and the number of private jobs decreased by 3,000 under the August data, with the previous value increasing by 54,000.

The U.S. government has shut down most operations as partisan divisions hinder Congress from reaching a funding agreement with the White House, and thousands of federal positions are at risk. Government shutdowns may lead to much attentionEconomic indicators, including non-farm employment reports, were delayed, which was originally scheduled to be released on Friday.

Gold, as a non-interest-bearing asset, is regarded as a hedging tool in times of economic and geopolitical uncertainty, and performs especially well when interest rates are low.

CME Group's FedWatch tool shows that investors are currently betting on the Fed's interest rate cut this month as high as 99%.

SPAngel analysts said in a report: "We are now seeing rising interest from Western investors, both institutions and retail investors, and are 'fear of missing out on FOMO'... If this trend continues, we will not be surprised that gold prices have exceeded $4,000 per ounce."

In other precious metals, spot silver rose 1.6% to $47.42 per ounce, a record high of more than 14 years; platinum fell 1.6% to $1,549.17 per ounce; palladium fell 1.1% to $1,243.31 per ounce. Oil market

Oil prices fell for the third consecutive day on Wednesday, hitting a 16-week low as the U.S. government shutdowns intensified market concerns about the global economy, while traders expect more oil supplies to appear in the market as OPEC+ plans to increase production next month.

Brent crude oil futures fell 1.0% to close at $65.35 a barrel, the lowest closing price since June 5; U.S. crude oil fell 0.9% to close at $61.78, the lowest closing price since May 30.

The CEO of Diamondback Energy, one of the largest U.S. oil producers, said Wednesday that if oil prices remain near $60 a barrel, U.S. oil production growth will stagnate as profitable drilling decreases at this level. In other energy markets, U.S. gasoline futures closed at their lowest point in nearly a year.

Rystad analyst Janiv Shah said that even if demand in the United States and Asia begins to decline, traders expect OPEC+ to increase production in November will be roughly the same as 500,000 barrels per day in September.

OpEC+ may agree to increase oil production to up to 500,000 barrels per day in November, three people familiar with the matter said, as Saudi Arabia, the group's dominant country, pushed for a regaining market share. OPEC posted on X website that media reports on the planned increase in production by 500,000 barrels per day are misleading.

One OPEC+ www.xmtraders.committee stressed the need for full www.xmtraders.compliance with the oil production agreement and required some member states to reduce additional production to make up for previously exceeding quotas, OPEC said in a statement.

Oil prices were also suppressed by a larger-than-expected increase in U.S. crude oil inventories last week. U.S. crude oil, gasoline and distillate stocks rose last week, the U.S. Energy Information Administration said on Wednesday. In the week ending September 26, crude oil inventories increased by 1.8 million barrels to 4.16.5 billion barrels, a Reuters survey showed analysts expected an increase of 1 million barrels.

The U.S. government closed most of its business on Wednesday due to serious partisan divisions and the White House was unable to reach a funding agreement. Government agencies warn that this will lead to the unreleased release of the much-watched September employment report. The White House warned Wednesday on the first day of the federal government shutdown that layoffs were imminent, but Vice President Vance insisted that no final decision had been made.

U.S. manufacturing activity rebounded slightly in September, but new orders and jobs were curbed as factories struggled to cope with the impact of President Trump's overall tariffs.

Foreign exchange market

The dollar fell to its lowest two-week against the yen on Wednesday, after data showed that private jobs in the United States shrank in September, strengthening the Fed's expectation that the Fed will cut interest rates twice this year. The dollar fell to a week's lowest against the euro and pound after employment data were released.

The ADP National Employment Report released on Wednesday showed that private jobs in the United States decreased by 32,000 in September, and economists surveyed were previously expected to increase by 50,000. The August reading was revised to a decrease of 3,000, with the previous value increasing by 54,000. Erik Bregar, director of foreign exchange and precious metals risk management at SilverGoldBull, said: "From one data point after another, the employment situation seems to be deteriorating little by little. The weakening of the U.S. job market is a big topic. Official data sources have been shelved due to the shutdown, and some people may like this because these data sources have been less reliable recently."

The data from the London Stock Exchange Group (LSEG) showed that after the release of ADP data, the U.S. interest rate futures market believes that it will cut interest rates by nearly 50 basis points this year, with an expected Tuesday of about 43 basis points. The market believes that the probability of interest rate cuts in October is about 99%.

ADP's report was www.xmtraders.compiled in conjunction with the Stanford University Digital Economy Laboratory, and the ADP report has attracted more attention from investors seeking new clues to the labor market as the Labor Department's more www.xmtraders.comprehensive and more concerned September employment report will not be released on Friday.

The U.S. government officially shut down just hours after the Senate rejected a short-term spending bill to keep the government running until November 21. U.S. Senate Majority Leader Thun said the Senate will vote again on the bill passed by the House on Wednesday.

In afternoon trading, the dollar fell 0.6% against the yen to 147.07 yen, after hitting its lowest since September 17. The US dollar was flat against the Swiss franc at 0.7967 Swiss franc.

The dollar hit a weekly low against the euro. The euro rose 0.1% against the dollar at $1.1738. The pound rose 0.3% against the dollar at $1.3487, reaching its highest in the week earlier.

The US dollar index once hit a week's lowest point, at 97.68 at the end of the session, down 0.2%. Some safe-haven buying has appeared in the market, low-yield currencies such as the Japanese yen are sought after, and U.S. Treasury bonds and gold remain strong.

U.S. President Trump warned Congressional Democrats on Tuesday that putting the federal government in a shutdown at midnight would lead to his administration's "irreversible" actions, including closing projects that are important to them.

The U.S. Department of Labor and www.xmtraders.commerce said that if partial shutdowns, their statistical agencies will stop publishing data. This includes non-farm employment data scheduled for Friday, which is considered key to judging whether the Fed is likely to cut interest rates by the end of this month.

For the market, the duration of the shutdown is key, and there are weeks left before the Fed's next policy decision on October 29. By www.xmtraders.comparison, traders believe the Bank of Japan's rate hike this month is about 40%. A short-term forecast of the quarterly forecast for the Bank of Japan on Wednesday showed confidence among large Japanese manufacturers rose for the second consecutive quarter, with www.xmtraders.companies maintaining optimistic spending plans.

Bank of Japan officials have been more hawkish in recent days, including former dovish deliberation www.xmtraders.committee member Asahi Noguchi, who said on Monday the need to tighten policies is increasing and "more necessary than ever."

International News

On the first day of the "suspension" of the US government, the Senate again rejected the temporary appropriation bill

The US Senate rejected a temporary appropriation bill proposed by the Republican Party on the 1st, shattering hopes of quickly ending the federal government's "suspension". In the vote held that morning, only three Democratic senators supported the Republican proposal to extend federal government funds to the temporary appropriations bill by the end of November, with a total of 55 votes in favor, failing to reach the 60 votes required to pass.

The U.S. Senate will suspend voting on the government appropriations bill on the 2nd

The U.S. Senate will suspend voting on the Republican and Democratic government appropriations bill on October 2. If an agreement is not reached to break the deadlock, lawmakers will vote on the 3rd and 4th. It is not clear exactly when the voting will be voted.

Sources said Hamas may have the conditions to accept the "20-point plan"

A source close to the Palestinian Islamic Resistance Movement (Hamas) told Xinhua News Agency on the 1st that Hamas may have the conditions to accept the "20-point plan" proposed by US President Trump to end the conflict in the Gaza Strip. Hamas and relevant factions in Palestinian circles entered the second day of the day. The source said that Hamas may have set a condition that some of the provisions of the plan must be revised, a clear schedule for the Israeli military withdrawal and the guarantees related to Hamas.

Group of Seven Statement Takes Measures to Cut off Russia's Fiscal Revenue Source

Group of Seven Statement: Member States unanimously agree on the importance of adopting trade measures such as tariffs and import and export bans to cut off Russia's Fiscal Revenue Source. Measures will be taken to significantly reduce imports to Russia, with the goal of gradually stopping all dependence on Russia's energy, including hydrocarbons.

Sumers criticized Fed Director Milan's debut speech: The theory of a sharp rate cut lacks analytical support

Former U.S. Treasury Secretary Lawrence Summers criticized Stephen Milan for his first speech as a Fed director, saying that he failed to provide a reasonable basis for a significant rate cut. “I can’t think of a more analytical speech that has been delivered at the New York Economic Club, or the Fed’s directors have given more analytical speech than that,” Summers told David Westin on the WallStreetWeek program in Bloomberg. "If this is the best argument for radical interest rate cuts that President Trump has been advocating, it's even weaker than I thought before." Milan joined the Fed ahead of the September 17 interest rate decision, after he was Trump's chief White House economist. He talked about the so-called neutral interest rates in his speech last week. He believes that Trump's policy lowers neutral interest rates, making the Fed's current monetary stance too tight.

The U.S. Supreme Court allows Fed Director Cook to remain in office temporarily

The U.S. Supreme Court issued a directive on the 1st allowing U.S. Federal Reserve Director Lisa Cook to remain in office temporarily until the court held an oral debate in January 2026 on whether President Trump has legal reasons to fire him. US media believe that the Supreme Court's move temporarily prevents Trump from firing Cook and temporarily builds a firewall for the Fed's independent decision. Previously, the Supreme Court allowed Trump to remove officials from the Federal Trade www.xmtraders.commission, the Bureau of Labor Statistics and other institutions. The directive shows that the Supreme Court is willing to consider imposing some restrictions on the president's power.

Zelensky: Ukraine has www.xmtraders.completed EU legislative review

On October 1, local time, Ukrainian President Zelensky said that Ukraine has www.xmtraders.completed internal review of legislation that is consistent with EU law and is ready to open the first cluster of EU membership negotiations. He said that Ukraine www.xmtraders.completed this process faster than any country, and he also called for the promotion of the alliance negotiations as soon as possible. Ukraine needs to make actual progress on the alliance negotiations.

The German government wants to build the world's first nuclear fusion power plant

On October 1, local time, the German government passed an action plan called "Germany towards a nuclear fusion power plant" at the federal cabinet meeting in Berlin, striving to build the world's first nuclear fusion power plant in Germany. According to the action plan, by 2029, Germany will invest more than 2 billion euros in this field to fund related research and support the construction of research infrastructure and technology demonstration devices.

Russia formulates a retaliation plan Once the EU takes action, nationalizes foreign assets and sells them

People close to the Russian government revealed that once Europe seizes the country's overseas assets, Moscow may nationalize foreign assets and sell them quickly under the new privatization mechanism. Russian President Putin signed an order on Tuesday to allow the rapid sale of state-owned assets under special procedures. The person familiar with the matter said the presidential decree aims to speed up the sale of various types of www.xmtraders.companies in Russia and abroad. If the EU begins seizing Russian assets, Moscow may take corresponding measures to retaliate.

IdeaThe draft budget of Italy sets the 2025 deficit to the EU's 3% upper limit

People familiar with Italy's latest draft fiscal plan revealed that the country's budget deficit will reach the EU's upper limit of 3% of economic output this year. The figures were included in documents to be approved by Prime Minister Meloni’s cabinet on Thursday, the people said. The draft includes a 0.6% growth forecast for this year and a 0.7% growth forecast for 2026. As the discussion is still underway. The Italian Ministry of Finance said it would not www.xmtraders.comment as the budget has not been finalized.

Domestic News

The world's first 16-megawatt floating wind turbine www.xmtraders.completed integrated assembly

On October 1, the "Three Gorges Pilot" 16-megawatt floating offshore wind power www.xmtraders.complete system demonstration application project, developed and constructed by the Three Gorges Group, www.xmtraders.completed integrated assembly in Tieshan Port District, Beihai City, Guangxi Zhuang Autonomous Region. This is the world's largest single-unit floating offshore wind power system equipment, marking another step forward in my country's offshore wind power equipment manufacturing industry to the deep sea.

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