Gold prices eased slightly in Asian trading on Friday, trimming part of their weekly gains as investors maintained a strong appetite for risk assets despite concerns surrounding the ongoing U.S. government shutdown.
Positive sentiment around artificial intelligence developments and expectations for additional U.S. interest rate cuts helped keep equity markets buoyant this week, with Wall Street indices hitting a series of record highs. While gold also climbed, its gains were limited by reduced demand for safe-haven assets.
Spot gold slipped 0.3% to $3,847.27 an ounce, while December gold futures held steady at $3,871.12/oz by 01:06 ET (05:06 GMT). Earlier in the week, spot gold touched an all-time high of $3,897.20/oz.
Safe-haven demand offset by strong risk appetite
The persistent enthusiasm for risk-driven investments constrained demand for gold and other safe-haven assets, as global equities recorded steady gains. Historical patterns suggested that government shutdowns in the U.S. typically have a limited effect on financial markets, further easing investor concerns.
Expectations for lower U.S. interest rates also supported risk sentiment. Private sector employment data showed continued weakness, drawing more attention than usual given that official September nonfarm payrolls were delayed due to the shutdown.
Other precious metals also saw modest declines Friday after solid gains earlier in the week. Spot platinum dropped 0.6% to $1,567.97/oz, while spot silver was steady at $47.0025/oz. Over the week, silver rose 2.3%, and platinum remained largely unchanged.
Gold is poised to add 2.2% for the week, marking its seventh consecutive weekly gain, driven by growing confidence that the Federal Reserve will continue to cut interest rates later this year.
Markets priced for October Fed cut
Weak private labor reports reinforced expectations of another Fed rate reduction in October, following the 25 basis point cut in September. According to CME FedWatch, the market is pricing a 99.3% probability of an additional 25 bps cut at the end-of-October meeting.
Expectations for further easing were strengthened by Challenger job cuts data showing continued layoffs in September, albeit at a slower pace than the prior month, and ADP payroll data revealing a sharp deterioration in private employment. These readings attracted more attention than usual due to the delay of official nonfarm payrolls.
The Fed cited growing labor market risks as a key reason for September’s rate reduction, although some officials have expressed caution over the necessity of further cuts amid persistently high U.S. inflation.
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