Gold prices hovered near record levels in Asian trading on Thursday as safe-haven demand remained supported by the ongoing U.S. government shutdown and growing confidence in further interest rate cuts.
The yellow metal hit a series of highs this week as the U.S. government shutdown after Congress failed to pass a spending bill will delay the release of key labor market data this week, leaving markets uncertain about the path of interest rates.
Spot gold was steady at $3,864.63 an ounce, while December gold futures fell 0.2% to $3,889.65 an ounce by 00:45 ET (04:45 GMT). Spot prices hit a record $3,895.33 on Wednesday.
US government shutdown expected for at least 3 days, jobs data delayed
The US government shutdown is expected to continue for at least three days, disrupting many federal operations across the country. Senate lawmakers also appeared to have made little progress in reaching a consensus on a spending bill.
A prolonged shutdown could hurt the U.S. economy with disruptions to essential services. President Donald Trump’s threat to lay off more federal workers could also hurt the labor sector.
The closely watched non-farm payrolls data, originally scheduled for release this Friday, is now expected to be delayed until at least next week.
However, private sector employment data released on Wednesday showed the labor market continued to cool, keeping markets optimistic about further rate cuts by the Federal Reserve. This view pressured the dollar and benefited the metals market.
Other precious metals also cooled on Thursday after strong performances this week. Spot platinum was steady at $1,563.46 an ounce, while spot platinum fell 0.2% to $47.2535 an ounce. Both metals hit 10-year highs this week.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.4% to $10,422.05 a tonne, while COMEX copper futures rose 0.4% to $4.9145 a pound.
Markets see 97% chance of rate cut in October
The market is pricing in a 97% chance of a 25 basis point cut by the Fed by the end of October, and a 3% chance of a larger 50 basis point cut, according to CME Fedwatch.
A series of recent data points to a cooling of the US economy, with particular weakness in the once-strong labour market. The Fed cut interest rates by 25 basis points in September amid concerns about slowing job growth.
However, a number of Fed officials have warned that persistent inflation could prevent the central bank from cutting interest rates further. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose as expected in August, with core inflation remaining above the central bank’s 2% annual target, according to data released last week.
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