Gold nears record high, set for seventh weekly gain

Gold prices strengthened on Friday, holding close to record levels and poised for a seventh straight week of gains as investors weighed the economic fallout from an extended US government shutdown and rising expectations of interest rate cuts.

Spot gold advanced 0.7% to US$3,884.19 an ounce by 1.40pm ET (17.49 GMT), just shy of Thursday’s all-time peak of US$3,896.49. The metal has already risen more than 3% this week. US gold futures for December delivery closed 1.1% higher at US$3,908.90.

“The longer the government remains closed, the more support it provides to gold,” said Jim Wyckoff, senior analyst at Kitco Metals. “Conversely, a sudden deal to reopen could turn sentiment bearish.”

The shutdown, now in its third day, continues with little sign of progress in the Senate as rival Democratic and Republican proposals face fresh votes. Meanwhile, the release of the closely watched non-farm payrolls report has been delayed, leaving investors reliant on other signals of a cooling jobs market — further fuelling bets on imminent monetary easing.

Traders are pricing in a 97% chance of a quarter-point rate cut in October and an 85% likelihood of another in December, according to CME Group’s FedWatch tool. Lower borrowing costs and a weaker dollar typically boost gold, which has surged more than 47% so far this year.

UBS said in a note it sees the metal climbing to US$4,200 in the coming months, citing falling real interest rates and expectations of further dollar weakness.

Among other precious metals, silver jumped 2.1% to US$47.96 an ounce, platinum gained 2.4% to $1,606.29, while palladium rose 1.5% to US$1,259.41.

Reuters