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Rate cut bets on US shutdown worries will cause gold to rise for the seventh consecutive week

Gold prices rose on Friday as they were poised to make a weekly gain for the seventh time in a row, boosted by concerns about an extended government shutdown, and expectations that U.S. rates will be cut.

Gold spot rose 0.5%, to $3.874.66 an ounce at 09:13 am. After hitting a record-high of $3,896.49 Thursday at 1313 GMT, ET (1313 GMT) is the next time to buy gold. The prices have risen 3.1% this week.

U.S. Gold Futures for December Delivery rose by 0.8% to $3.899.1 an ounce.

"I believe the longer the government remains shut down, the more bullish the gold market will be." If there is a weekend surprise agreement to reopen the government, it would be a bearish factor, said Jim Wyckoff senior analyst at Kitco Metals.

There is no indication that either of the dueling Democratic or Republican plans will be adopted to end a shutdown which has now entered its third day.

Investors are now relying on alternative indicators to confirm the cooling of the labor market, and to maintain expectations for a rate cut imminent.

According to CME Group’s FedWatch tool, investors are pricing in 98% of the probability of a rate cut of 25 basis points in October. They also expect a similar reduction of 90% in December.

Gold is often used to store value in times of uncertainty. It thrives when interest rates are low and has increased by over 47% this year.

UBS said in a note that it expects the price of gold to reach $4,200 an ounce in the next few months. This is because the "opportunity costs of holding gold are falling due to the declining real interest rate in the U.S. While expectations of continued broad U.S. Dollar weakness are another tailwind."

Spot silver rose by 1.4% to $46.73 per ounce. Platinum increased 1.9% to $1599.01 per an ounce. Palladium climbed 1% to $1253.75 per an ounce. Reporting by Noel John in Bengaluru and John Biju from Mumbai

(source: Reuters)