Bengaluru — Gold prices surged to a record high on Wednesday, driven by investor demand for safe-haven assets after the official start of the US government shutdown and as soft labour data bolstered the expectation of Federal Reserve rate cuts.
Spot gold was up 0.1% at $3,861.99/oz 3.59am GMT, after hitting a record high of $3,875.32.
US gold futures for December delivery gained 0.7% to $3,901.40.
The dollar index hovered near a one-week low, making greenback-priced gold more affordable for overseas buyers. Wall Street futures slipped.
Gold was benefiting from “concerns over a weaker dollar and the political situation with the standoff about a government shutdown in the US and also general geopolitical uncertainty,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
He added that the outlook remained bullish, with upside targets pointing to $3,900-plus, possibly up to $4,000.
The US government shut down much of its operations as deep partisan divisions prevented Congress and the White House from reaching a funding deal, setting off what could be a long, gruelling standoff that could lead to the loss of thousands of federal jobs.
The shutdown could delay the release of key economic data, including the nonfarm payrolls report due on Friday.
The Job Openings and Labor Turnover Survey (Jolts) on Tuesday indicated marginal growth in US job openings in August, alongside a decline in hiring, with traders now pricing a 25 basis point (bp) reduction this month and another in December.
The ADP National Employment Report, due later in the day, is expected to offer additional labour market insights.
Potential risks to gold’s rally included an uptrend in the dollar, unexpected hawkish Fed policy shifts, and fiscal reforms in the US, said Michael Hsueh, Deutsche Bank precious metals analyst.
Gold, a traditional hedge against economic and political uncertainty, thrives in a low-interest-rate environment due to its non-yielding nature. It has gained more than 47% this year.
Markets in China, the world’s largest gold consumer, remained closed for the mid-autumn festival and will reopen on October 9.
Elsewhere, spot silver gained nearly 1% to $47.09/oz, hitting a more than 14-year high. Platinum fell 0.2% to $1,570.85, while palladium was down 0.7% at $1,248.45.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.