The week kicked off with a bang as gold prices confidently marched toward historic highs, reminding the market of gold's perennial status as a price record-setter. During the opening hours of Asian trading, the price of spot gold climbed by 0.8%, reaching $3,920.31 per ounce. Meanwhile, December futures were not far behind, testing the $3,944.45 mark.

Investors have no shortage of reasons for renewed enthusiasm in gold. The Japanese yen tumbled sharply early in the day, with the USD/JPY pair jumping by 1.4% to 149.58. The Japanese currency was weighed down by the election of Sanae Takaichi, an advocate of loose fiscal policy, as the new leader of Japan’s ruling party. For many in the market, this signals an extension of Japan’s well-known era of generous economic stimulus.

In the United States, across the Pacific, confidence in an upcoming Fed rate cut has reached a state of near-meditative calm. Traders are now pricing in a 99% likelihood that the autumn FOMC session will be marked by lower interest rates. Against this backdrop, the dollar slipped into the shadows, and bond yields fell alongside soured analyst sentiment.

The cherry on top is a classic from the American political playbook. Another round of budget talks now risks a government shutdown. Although overseas markets largely shrugged off the news, demand for gold suggests that some investors are in no mood to take chances.