NEW YORK: Gold prices surged to a record high on Wednesday, lifted by a weaker dollar and safe-haven demand amid a US government shutdown, while softer jobs data reinforced expectations of a Federal Reserve rate cut this month.
Spot gold climbed 0.2 percent to USD3,866.10 per ounce, as of 09:16 a.m. ET (1055 GMT), after hitting an all-time high of USD3,895.09 earlier in the session.
US gold futures for December delivery gained 0.5percent to USD3,892.80. The dollar weakened against a basket of other leading currencies, making dollar-priced gold more affordable for overseas buyers.
“The dollar has been under pressure because usually when the government shuts down, the mood turns quite negative on the US and both the dollar and US equity markets are one of the casualties,” said Marex analyst Edward Meir. The soft ADP jobs report “is also not going to help the dollar. Yet another reason, slowing economy, meaning lower rates, all these things are bullish for the gold.”
US private payrolls decreased by 32,000 jobs in September, after a downwardly revised 3,000 decline in August. Economists polled by Reuters had forecast private employment increasing 50,000 following a previously reported 54,000 advance in August.
The US government has shut down large parts of its operations, potentially putting thousands of federal jobs at risk, after partisan divisions prevented Congress and the White House from reaching a funding deal.
The shutdown could delay the release of key economic indicators, including the closely watched non-farm payrolls (NFP) report scheduled for Friday.
Non-yielding gold, viewed as a safe-haven asset in times of economic and geopolitical uncertainty, thrives in a low-interest-rate environment. Investors are pricing in a 99 percent chance of a rate cut this month, per the CME FedWatch Tool. “We are now seeing increased appetite from Western investors, both institutional and retail, as a case of ‘FOMO’ kicks in... Should this trend continue, we would not be surprised to see gold prices break above USD4,000/oz,” SP Angel said in a note. Elsewhere, spot silver gained 1.4 percent to USD47.33 per ounce, a more than 14-year high. Platinum fell 0.5 percent to USD1,566.30, and palladium was down 1.4percent at USD1,239.97.