Latest News

Gold prices rise for the seventh consecutive week on fears of a US shutdown and rate cuts expectations

Gold prices held firm on Friday as they headed for their seventh consecutive weekly increase, as the expectation of more U.S. rate cuts and concern over an extended government shutdown contributed to support.

As of 0739 GMT on Friday, spot gold remained at $3,859.69 an ounce after reaching a record-high of $3,896.49 per ounce on Thursday. This week, the bullion price has risen by 2.7%.

U.S. Gold Futures for December Delivery were up 0.4% to $3,883.

The U.S. shutdown is now in its third week, as of Friday. This has caused key economic data to be delayed, including the nonfarm payrolls report that was scheduled for Friday.

Alternative data from both public and private sources showed that the U.S. employment market likely remained stagnant in September, with slow hiring and no change to unemployment rates.

UBS analyst Giovanni Staunovo said that the data indicates the Fed will cut rates. "And as we expect further rate cuts in the coming months, this should further support the gold prices over the next few months. We are looking for the yellow metallic to surpass the $4,000/oz by the end this year."

According to CME Group’s FedWatch tool, investors are pricing in 97% of a rate cut of 25 basis points in October and 88% of another such cut in December.

Lorie Logan, President of the Federal Reserve Bank of Dallas, said that the Fed had taken out insurance against a sharp decline in the labour markets with its rate reduction last month but still needed to be cautious.

In an environment of low interest rates, gold, which is often used to store value in times of political or financial uncertainty, thrives. Bullion prices have risen by 47% this year.

In India, gold demand rose despite the record-high prices this week, and Chinese markets were closed on a holiday.

Silver spot rose 0.7% at $47.30 an ounce. Platinum was up 0.2% at $1,571.91 while palladium increased 0.7%, to $1250. (Reporting and editing by Anmol Mukherjee and Anmol Choubey in Bengaluru)

(source: Reuters)