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Gold nears record high due to rate-cut betting and political uncertainty

Gold prices held near record levels on Thursday as the demand for gold was driven by a combination of political uncertainty and expectations that U.S. rates will be cut further this year.

By 0810 GMT, spot gold had risen 0.2% to $3,865.73 an ounce, from the all-time record high of $3.895.09 on Wednesday. U.S. Gold Futures for December Delivery fell by 0.2% to $3.890.80.

The U.S. Dollar Index has slipped to near the one-week lows set on Wednesday.

On Wednesday, data showed that private payrolls in the United States fell by 32,000 positions in September. This follows a downwardly-revised 3,000 job loss in August.

Ole Hansen is the head of commodity strategy for Saxo Bank. He said: "Overall, the softer dollar and weak economic data highlighted in yesterday's ADP report, as well as the government shutdown, continue to attract investors who are looking to get on board the momentum train."

The U.S. Government has closed down many of its operations. This could put thousands of federal government jobs in danger and delay the release of important economic indicators such as the non-farm payrolls report (NFP), which is due on Friday.

According to CME FedWatch, traders are pricing in an almost certain 25-bp cut in interest rates this month.

In a low interest rate environment, gold, which is viewed as an asset of safety in times of economic and political uncertainty, flourishes.

Gold is Goldman Sachs’ highest conviction long-term commodity recommendation. The bank stated this in a Wednesday note.

Goldman Sachs said that the risks of our forecasts for gold prices at $4,000/oz in mid-2026, and $4300/oz in December 2026 have increased due to speculative positions and a large surprise on the upside to Western ETFs.

SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings rose by 0.59% on Tuesday, to 1,018.89 tons of gold on Wednesday. This was their highest level since July 2022.

The price of spot palladium rose 1.7%, while platinum rose 1.2%, to $1,575.06. (Reporting by Ishaan Arora in Bengaluru; Editing by Louise Heavens)

(source: Reuters)