How to resolve the error 'fe_sendauth: no password supplied' in Rails using PostgreSQL?

My solution to this problem was to remove host: localhost from the default: group.

PostgreSQL matches pg_hba.conf entries in the order they are specified, so it uses the pre-specified host all all 127.0.0.1/32 md5 entry for authentication instead of your specified trust entry.

Move your custom trust entries above the pre-specified ones (and optionally comment out the old ones) and then reload your configuration by running sudo service postgresql reload (on Ubuntu) or rebooting.