Gold prices surge 2% on optimism over US government reopening

Spot gold climbed to US$4,208.98 per ounce, marking its highest point since October 21, by 1.46pm ET (1846 GMT). Meanwhile, US gold futures for December delivery ended 2.4% higher, settling at US$4,213.60 per ounce.

The benchmark US 10-year Treasury yields fell by 1%, hitting their lowest level since November 5.

"The market is anticipating that the reopening of the US government will lead to the release of economic data, which is likely to show signs of a weakened American economy," said Bart Melek, head of commodity strategies at TD Securities. He added that traders might be increasing long positions and closing some short positions in response to the government reopening.

The Republican-controlled House of Representatives was scheduled to vote on a deal to end the longest government shutdown in US history, which has lasted for 42 days. The shutdown had put a halt to critical government data, forcing policymakers and markets to rely on private data to assess the state of the economy.

Silver prices also experienced a boost, rising 4.6% to US$53.58 per ounce, the highest level since October 17. "Silver supplies are running low, and the rally in gold is a spillover effect from the silver market," explained Bob Haberkorn, market strategist at RJO Futures.

Additionally, recent data from ADP showed that private employers had shed an average of 11,250 jobs per week in the four weeks ending October 25, reflecting ongoing weakness in the labour market.

Traders are now pricing in a 65% chance of a 25-basis-point rate cut by the Federal Reserve in December, according to CME Group's FedWatch tool. Gold, which does not yield interest, tends to perform well in low-interest-rate environments and during periods of economic uncertainty.

In other precious metals, platinum rose 2% to US$1,616.80 per ounce, while palladium gained 2.5%, reaching US$1,480.58.

Reuters