Gold prices strengthened in Asian trading on Friday, supported by renewed caution over the U.S. economic outlook that spurred demand for safer assets. However, optimism was tempered as markets continued to scale back expectations for a Federal Reserve rate cut in December.
The metal was also on track to record its first weekly advance in nearly a month, having reclaimed the $4,000-per-ounce threshold with ease earlier in the week. Other precious metals also traded higher.
Spot gold added 0.4% to $4,187.43 an ounce by 00:24 ET (05:24 GMT), while December gold futures dipped slightly to $4,190.75 an ounce.
Gold finds support amid U.S. economic uncertainty
Spot prices were up roughly 5% for the week, lifted by safe-haven demand as investors grew increasingly uneasy about the near-term trajectory of the U.S. economy.
The government shutdown—lasting almost 43 days—ended this week, meaning delayed economic indicators will begin to roll out again soon.
But traders remained anxious that upcoming figures could reveal deeper economic weakness, especially as the shutdown likely distorted key data. U.S. officials warned on Thursday that inflation and labor readings for October may never be released because of the disruption.
Other precious metals joined Friday’s advance. Spot platinum gained 0.5% to $1,593.83 per ounce, while spot silver climbed 1.1% to $52.8815 per ounce. Silver far outperformed the group, surging 9% this week and moving back toward October’s record highs.
Expectations for a December Fed rate cut continue to fade
With few official indicators available, markets remain uncertain about the data outlook heading into the Fed’s final meeting of the year. As a result, traders have sharply reduced wagers on a December rate cut.
ANZ analysts noted that “It may take days or even weeks for the federal bureaucracy to fully restart and issue long awaited economic data. Any delays could keep Fed governors relatively cautious,” referencing recent comments from San Francisco Fed President Mary Daly that it was still too early to determine whether a cut was warranted.
According to CME’s FedWatch tool, markets now assign just a 45.4% probability to a 25-basis-point reduction—down steeply from 64.3% a week ago. Odds of the Fed holding rates steady soared to 54.6% from last week’s 35.7%.
The dollar saw little lift from the shift in expectations, as worries about U.S. economic momentum outweighed support from the prospect of steady short-term rates. The currency was on track for a weekly drop of about 0.4%, indirectly helping boost metal prices.