Gold Gains as Dollar Weakens and Rate Cut Hopes Rise
Gold prices climbed on Friday as the US dollar lost strength. Investors are betting on another interest rate cut by the Federal Reserve after weak job data signaled a cooling labor market.
Spot gold rose 0.4% to $3,994.03 per ounce by 03:41 GMT. However, it was still set for a small weekly loss of 0.3%. US gold futures also gained 0.3%, reaching $4,004.40 per ounce.
The precious metal has dropped nearly 8% since hitting a record high of $4,381.21 on October 20. Yet, traders remain optimistic as market conditions turn favorable again.
Weak Jobs Data Boosts Gold
New data showed the US economy lost jobs in October, mainly in the government and retail sectors. Cost cutting and growing use of artificial intelligence led to higher layoffs, adding to concerns about slowing growth.
“The private jobs data still suggests a December rate cut is likely. That’s why gold prices are seeing support,” said Soni Kumari, a commodity strategist at ANZ.
As a result, the dollar retreated, dropping against major currencies. Investors, lacking fresh official figures, are relying on private sector surveys to gauge market trends. A weak labor market often pushes the Fed toward rate cuts, which tend to benefit gold.
Market forecasts now show a 69% chance of a December rate cut, compared to 60% in the previous session. Last week, the Fed reduced rates, and Chair Jerome Powell hinted this might be the final cut for the year.
Safe Haven Demand Rising
Ongoing political gridlock in Washington has triggered the longest US government shutdown in history. This uncertainty has further boosted demand for gold as a safe haven asset.
Kumari added that investors are also watching key macroeconomic indicators closely. “Until the shutdown ends, gold will likely stay supported,” she noted.
Gold generally performs well during low-rate environments and times of economic instability.
In other metals, spot silver gained 0.7% to $48.31 per ounce, while platinum slipped 0.4% to $1,534.21. Palladium edged up 0.3% to $1,379.33.
