NEW YORK: Gold prices rose on Thursday to a more than three-week high on expectations the US government reopening would increase debt levels, while publication of delayed US economic data could provide more clarity on Federal Reserve interest rate policy. Spot gold gained 0.7percent to USD4,229.19 per ounce, as of 1147 GMT, its highest since October 21. US gold futures for December delivery rose 0.5percent to USD4,234.10 per ounce.“
Precious metals are rallying alongside equities as traders continue to front run dovishness and the resolution of the US government shutdown will not significantly alter the trajectory, as it is expected to contribute to an increase in debt levels,” said Hugo Pascal, a precious metals trader at InProved.
“Physical demand for silver and gold remains robust and recent US economic indicators signal weakening growth, a favourable combination for metals prices.” US President Donald Trump on Wednesday signed legislation ending a 43-day government shutdown, the longest in US history, which delayed critical economic data such as jobs and inflation reports.
The agreement funds federal operations through January 30, but the government is projected to add USD1.8 trillion annually to its USD38 trillion debt burden. Fed Chair Jerome Powell has cautioned against further easing this year, partly due to a lack of data, while cutting the interest rate by a quarter-point last month.
Economists said the US Labour Department should prioritise November employment and inflation data to ensure Fed officials have up-to-date information at their December policy meeting. A Reuters poll found that 80percent of economists expect the Fed to cut rates by 25 basis points next month.
Lower interest rates typically benefit gold, which offers no yield and is often seen as a safe-haven asset during periods of economic uncertainty. Gold, up 61percent so far this year, reached a record USD4,381.21 on October 20, fuelled by economic and geopolitical concerns, rising ETF inflows, and expectations of further rate cuts. Elsewhere, spot silver climbed 0.6 percent to USD53.70 per ounce, moving towards a record high touched on October 17.
Platinum was down 0.1percent at USD1,613.17 and palladium fell 0.5percent to USD1,466.05.
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