Gold surges past $3,800/oz

Gold prices surged above $3,800 an ounce for the first time on Monday, driven by rising bets on a US Federal Reserve rate cut that weakened the dollar, while concerns over a possible US government shutdown bolstered safe-haven demand.

Spot gold jumped 1.4 percent to $3,812.49 per ounce by 0727 GMT, after hitting $3,819.59 earlier in the session. US gold futures for December delivery rose 0.9 percent to $3,842.20.

The US dollar index fell 0.2 percent, making greenback-priced bullion less expensive for overseas buyers. US President Donald Trump will meet with the top Democratic and Republican leaders in Congress later on Monday to discuss extending government funding. Without a deal, a shutdown would begin from Wednesday.

"With the Fed set to cut further rates over the next six months, I think there should be more upside for the yellow metal, targeting a level of $3,900/oz," said UBS analyst Giovanni Staunovo.

"Concern about the (US) government shutdown are also supporting demand for safe haven assets like gold," he added.

The US Personal Consumption Expenditures (PCE) Price Index on Friday matched expectations, reinforcing bets on further Fed rate cuts, with traders assigning a 90 percent chance of a 25-basis-point cut in October and a 65 percent probability for December, according to the CME FedWatch Tool.

Gold, which benefits from lower interest rates and thrives during geopolitical and economic uncertainty, has gained more than 45 percent year-to-date.

Many brokerages have turned bullish on the rally in gold prices. SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings rose 0.89 percent to 1,005.72 metric tons on Friday.

"We think official demand and ETF holdings are playing a pivotal role in gold strength, while jewellery demand and recycled supply are restraining factors," Deutsche Bank said in a note.