Gold prices reached an unprecedented peak on Wednesday, buoyed by a depreciating dollar and heightened safe-haven demand following a U.S. government shutdown. Additionally, weaker employment figures bolstered anticipations that the Federal Reserve will implement interest rate cuts in the upcoming month. Spot gold experienced a modest increase of 0.1%, reaching $3,861.77 per ounce at 01:48 p.m., following a prior ascent to a record high of $3,895.09.
U.S. gold futures for December delivery concluded the session with a 0.6% increase, reaching a price of $3,897.5. The dollar experienced a decline relative to a range of other major currencies, resulting in a decrease in the price of dollar-denominated gold for international purchasers. “The dollar has been under pressure because, usually, when the government shuts down, the mood turns quite negative on the U.S.,” said analyst Edward Meir, adding that the dollar and U.S. equity markets are among the casualties. The jobs report is unlikely to bolster the dollar, as a decelerating economy and decreasing interest rates are favorable for gold. In September, U.S. private payrolls experienced a reduction of 32,000 jobs, following a downward revision of a 3,000 job decline in August. Analysts surveyed had anticipated a rise in private employment by 50,000, following a previously reported increase of 54,000 in August.
The U.S. government has suspended significant portions of its operations, which could jeopardize thousands of federal employment positions, as partisan disagreements hindered Congress and the White House from arriving at a funding agreement. The shutdown may postpone the dissemination of key economic indicators, notably the highly scrutinized non-farm payrolls report set for release on Friday. Gold, which does not yield returns, is perceived as a safe-haven asset during periods of economic and geopolitical instability, and it tends to perform well when interest rates are low. Market participants are assigning a 99% probability to a rate cut occurring this month.
“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 $4,000/oz,” according to analysts. In the realm of precious metals, spot silver experienced an increase of 1.6%, reaching a level not seen in over 14 years at $47.42 per ounce. Conversely, platinum saw a decline of 1.6%, settling at $1,549.17, while palladium decreased by 1.1%, now priced at $1,243.31.