Gold prices remained stable on Friday, paving the way for a seventh consecutive weekly gain. This resilience in the gold market is largely attributed to growing expectations surrounding potential interest rate cuts in the United States later this year, coupled with concerns regarding the ramifications of a government shutdown.
As of 0247 GMT, spot gold was trading at $3,851.99 per ounce, showing minimal fluctuations after reaching a record high of $3,896.49 on Thursday. The precious metal has appreciated by 2.4% this week alone, reflecting a robust demand among investors.
In related market activity, U.S. gold futures for December delivery registered a slight increase of 0.2%, settling at $3,874.40.
“While the recent uptick in the dollar has posed a slight challenge for gold prices, the metal remains within striking distance of the $3,900 mark,” commented Tim Waterer, Chief Market Analyst at KCM Trade. “Given the ongoing uncertainty surrounding the government shutdown and the likelihood of lower interest rates making an appearance this month, the environment is conducive for gold to maintain its upward trajectory.”
As the U.S. government shutdown entered its second day on Thursday, the situation has raised concerns about delays in the release of crucial economic indicators, including the highly anticipated non-farm payrolls report, scheduled for release on Friday.
Lorie Logan, President of the Federal Reserve Bank of Dallas, stated that the central bank acted prudently by implementing a rate cut last month as a safeguard against potential downturns in the labor market. However, she emphasized the need for caution regarding any additional rate adjustments.
Interestingly, recent economic data from the U.S. has led to heightened expectations for further rate reductions this year. According to the CME Group’s FedWatch tool, traders are now anticipating an almost certain 25 basis-point cut in rates during this month.
Gold has historically been considered a reliable safe-haven asset during periods marked by political and economic instability. The ongoing low interest rate environment has played a significant role in boosting gold’s appeal, with the metal’s value soaring by an impressive 47% since the beginning of the year.
In a positive sign for the gold market, sales of gold products at the Perth Mint saw a remarkable 21% increase in September compared to the previous month. Additionally, silver sales surged to reach their highest level in five months, further indicating strong investor interest.
On a broader note, the precious metals market experienced mixed results. Spot silver prices dipped slightly by 0.2% to $46.85 per ounce, while platinum also saw a decrease of 0.2%, settling at $1,565.90. In contrast, palladium managed a modest gain of 0.4%, reaching $1,245.59.
