Gold hits record high as US shutdown, weak jobs data lift safe-haven rush

Gold prices surged to a record high on Wednesday, driven by investor demand for safe-haven assets after the official start of the US government shutdown and as soft labor data bolstered expectations of Federal Reserve rate cuts.

Spot gold was up 0.1% at $3,861.99 per ounce, as of 0359 GMT, after hitting an all-time high of $3,875.32.

US gold futures for December delivery gained 0.7% to $3,901.40.

The dollar index hovered near a one-week low, making greenback-priced gold more affordable for overseas buyers.

Wall Street futures slipped.

Gold is benefiting from “concerns over a weaker dollar, and the political situation with the standoff about a government shutdown in the US and also general geopolitical uncertainty,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

He added that the outlook remains bullish, with upside targets pointing to $3,900-plus, possibly up to $4,000.

The US government shut down much of its operations as deep partisan divisions prevented Congress and the White House from reaching a funding deal, setting off what could be a long, grueling standoff that could lead to the loss of thousands of federal jobs.

The shutdown could delay the release of key economic data, including the non-farm payrolls report due on Friday.

The JOLTS report on Tuesday indicated marginal growth in US job openings in August, alongside a decline in hiring, with traders now pricing a 25-basis-point reduction this month and another in December.

The ADP National Employment Report, due later in the day, is expected to offer additional labor market insights.

Potential risks to gold’s rally include an uptrend in the dollar, unexpected hawkish Fed policy shifts, and fiscal reforms in the United States, said Michael Hsueh, precious metals analyst, Deutsche Bank.

Gold, a traditional hedge against economic and political uncertainty, thrives in a low-interest-rate environment due to its non-yielding nature. It has gained more than 47% this year.

Markets in China, the world’s largest gold consumer, remained closed for the mid-autumn festival and will reopen on October 9.

Elsewhere, spot silver gained nearly 1% to $47.09 per ounce, hitting a more than 14-year high.

Platinum fell 0.2% to $1,570.85, while palladium was down 0.7% at $1,248.45.