Gold prices remained stable on Friday, on track for a seventh consecutive weekly increase, driven by expectations of additional interest rate cuts in the US and worries about the economic repercussions of an extended government shutdown.
As of 0921 GMT, spot gold climbed 0.03 percent to $3,857.25 per ounce, following a record high of $3,896.49 reached on Thursday. The precious metal has experienced a 2.6 percent gain this week alone.
US gold futures set for December delivery increased by 0.32 percent to $3,880.50 per ounce.
The ongoing US government shutdown, which has now entered its third day as of Friday, has postponed the release of crucial economic indicators, including the non-farm payrolls report that was also expected on Friday.
Alternative data from various sources indicated that the US job market likely faced stagnation in September, characterized by tepid hiring activity and stable unemployment rates.
This data implies that the Federal Reserve might consider cutting rates, with UBS analyst Giovanni Staunovo predicting that further cuts will likely bolster gold prices in the coming months, potentially allowing the metal to surpass the $4,000 per ounce mark by year-end.
Investors currently foresee a 97 percent chance of a 25-basis-point rate cut in October, with an 88 percent likelihood of a similar cut happening in December, according to CME Group’s FedWatch tool.
Lorie Logan, President of the Federal Reserve Bank of Dallas, noted that the Fed took proactive measures with its recent rate cut to guard against possible significant shifts in the labor market, while also emphasizing the need for caution.
Gold, frequently regarded as a safe haven during periods of political and economic uncertainty, benefits from a low-interest-rate environment. The price of bullion has surged by 47 percent thus far this year.
Additionally, despite soaring prices, physical gold demand in India experienced an uptick this week, while Chinese markets remained closed for a holiday.