US shutdown: The United States is facing a government shutdown as lawmakers have failed to agree on an extension of federal funding, triggering fears of a prolonged standoff that could leave thousands of federal employees without pay. The uncertainty has rippled across global markets, impacting gold, bond yields, the US dollar, and equities — raising pressing questions about how Indian investors should position themselves.
Gold Surges to Record High
Gold prices rallied to record levels on Wednesday as investors rushed to safe-haven assets amid the shutdown crisis. Spot gold climbed 0.1 per cent to $3,861.99 per ounce, as of 0359 GMT, after touching a lifetime high of $3,875.32 earlier in the session.
The metal is gaining from both global uncertainty and dollar weakness. Experts believe that gold is benefiting from concerns over a weaker dollar, the ongoing political situation with the U.S. government shutdown, and general geopolitical uncertainty.
With the dollar index hovering near a one-week low, gold has become cheaper for overseas buyers, further fueling demand.
Pressure on Dollar and Bond Yields
Market experts believe the shutdown could weaken the greenback and put US Treasury yields under strain. According to Anuj Gupta, Director at Ya Wealth, “If history repeats in the US and a shutdown occurs after a gap of nearly 107 years, it would put US dollar rates and US Treasury yields under pressure. This dip in the currency and bond markets may fuel demand for equity, gold, and mutual funds.”
Gold, Equities to Gain
Gupta further added that while gold and equities may gain globally, the key question is whether foreign institutional investors (FIIs) will channel funds into India or continue their “sell India, buy China and South Korea” stance, despite the Indian rupee gaining strength against the US dollar.
Sandeep Pandey, Co-founder of Basav Capital also explained, “Investors may be shifting their money from the bond and currency markets to safe havens, such as equities and commodities, particularly gold and silver. However, high-risk investors may also consider virtual assets, such as cryptocurrencies.”
He also noted that a stronger rupee against the dollar could lead to selective value buying by FIIs in Indian stocks, particularly in sectors like IT, banking, and consumer plays that stand to benefit from global demand recovery.
What does it mean for your Investments?
Gold – Prices are already at record highs, and any prolonged shutdown may provide further upside. Investors may consider systematic exposure rather than lump-sum buys at these elevated levels.
Equities – Short-term volatility is expected, but selective sectors could benefit if FIIs return to India. Domestic retail investors may continue to provide stability.
Bonds – Bond yields is expected to remain under pressure globally.
The Road Ahead
As the shutdown drama unfolds in Washington, markets worldwide will be closely watching whether US lawmakers can break the deadlock. Until then, volatility is likely to remain elevated across asset classes. For Indian investors, diversification remains the best strategy — balancing exposure to gold, equities, and fixed income while avoiding overreaction to short-term market swings.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
