Market Analysis by Felipe Barragán, Expert Research Strategist at Pepperstone
1 October 2025
“Gold pared its earlier losses on Tuesday, holding above USD 3,800 per ounce after sliding during the London session. The recovery reflected a broad move into defensive assets, with US Treasury yields falling across maturities and the Japanese yen strengthening against major currencies as investors sought traditional safe-haven assets.
The political backdrop in Washington remains a key driver. With less than 24 hours until a possible government shutdown, negotiations between President Donald Trump and congressional leaders remain deadlocked. A funding lapse would heighten risk aversion, adding to the case for safe-haven demand.
For emerging-market currencies, the outlook could be more precarious. While the Mexican peso and its peers have so far held steady, sustained risk aversion could trigger selling pressure if the US political impasse persists.
In the longer term, expectations of continued Federal Reserve easing and steady ETF inflows support the structural case for bullion. Central bank purchases also remain a pillar of demand, helping offset short-term profit-taking and ensuring gold retains its appeal as a hedge against policy and political uncertainty.
Geopolitical tensions in the Middle East and Eastern Europe add another layer of support, keeping the metal anchored near historic highs.”