Gold prices pulled back slightly in Asian trading on Friday, erasing some of their weekly gains as investors continued to favor riskier assets despite concerns over the ongoing U.S. government shutdown. Optimism about AI developments and expectations for further U.S. interest rate cuts kept equity markets buoyant, with Wall Street indices reaching fresh record highs. While gold also advanced this week, its gains were restrained by weaker demand for safe-haven assets.
Spot gold declined 0.3% to $3,847.27 an ounce, while December futures steadied at $3,871.12/oz by 01:06 ET (05:06 GMT). Earlier in the week, spot prices had reached a record $3,897.20/oz.
Safe-haven Demand Limited by Strong Risk Markets
Investor enthusiasm for risk assets weighed on gold and other haven assets, as global stock markets recorded consistent gains. Historical trends suggest that U.S. government shutdowns typically have only a limited impact on financial markets, which helped ease investor concerns.
The expectation of lower U.S. interest rates also boosted risk appetite. Private sector labor reports indicated sustained weakness, drawing attention as official nonfarm payroll data for September was delayed by the shutdown.
Other precious metals experienced mild declines on Friday after strong weekly gains. Spot platinum fell 0.6% to $1,567.97/oz, while spot silver remained steady at $47.0025/oz. Silver rose 2.3% over the week, while platinum remained largely unchanged.
Gold on Track for Seventh Consecutive Weekly Gain
Gold is set to rise roughly 2.2% this week, marking its seventh straight weekly gain amid growing confidence that the Federal Reserve will continue cutting interest rates later this year.
Markets Anticipate October Rate Cut
Weak private labor data reinforced market expectations of another Fed rate reduction in October, following the 25 basis point cut in September. CME FedWatch indicates a 99.3% probability of a further 25 bps cut at the end-of-October meeting.
Expectations were bolstered by Challenger job cuts data, which showed continued layoffs in September, albeit at a slower pace than the previous month, and ADP payroll data showing a sharp deterioration in private employment. These indicators drew heightened attention due to the delay of official nonfarm payroll figures.
The Fed cited growing labor market risks as the main driver for September’s rate cut, though some officials expressed caution about additional reductions given persistent inflation pressures in the U.S.
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