With the government operations stoppage threatening to cause a blackout in important economic data that the Fed uses to make rate decisions, the price of gold was trading close to $3,860 an ounce, some $35 below a high reached on Wednesday.
Gold holds near peaks
As the US government shutdown got underway and traders increased their bets on Federal Reserve interest-rate reduction in response to dismal private payrolls data, gold stabilized after a five-day rise that saw it hit consecutive peaks.
With the government operations stoppage threatening to cause a blackout in important economic data that the Fed uses to make rate decisions, the price of gold was trading close to $3,860 an ounce, some $35 below a high reached on Wednesday. As a result, non-government data—such as Wednesday’s ADP Research report, which revealed a steep decline in private-sector payrolls in September—has become more important to economists, traders, and policymakers.
Gold surges on Fed bets
The closure will force a delay in non-farm payroll figures that were expected on Friday, which might put more pressure on the currency. In an effort to boost a faltering job market, traders have increased their wagers that the Fed will lower interest rates twice more this year. When the dollar weakens, non-yielding gold also becomes more affordable for the majority of buyers, which is often the result of lower borrowing rates.
With a 47% increase this year, the precious metal is on pace to have its largest yearly rise since 1979. As the Federal Reserve started interest-rate reduction, central banks’ purchases and growing holdings in gold-backed exchange-traded funds have bolstered the surge.
Gold demand rises globally
According to Bloomberg statistics, monthly ETF inflows in September were the most in three years. Following a period of weak demand, the four most popular gold-backed funds saw inflows last month, indicating that Chinese purchasers were also acquiring more of these funds.
As worries about the Fed’s independence grow, demand for gold has also increased. In a blow to his attempts to gain greater authority over the central bank, the US Supreme Court on Wednesday denied President Donald Trump the right to fire Fed Governor Lisa Cook right away while she files a lawsuit to maintain her position.
After finishing 0.2% higher on Wednesday, spot gold slipped 0.2% lower to $3,859.22 an ounce at 8:10 a.m. in Singapore. There was no change in the Bloomberg Dollar Spot Index. After rising to its greatest level in 14 years during the previous session, silver fell. Palladium and platinum fell.