Gold gains as dollar softens, US shutdown jitters persist

Synopsis

Gold prices climbed on Friday as a weaker dollar and U.S. government shutdown uncertainty boosted safe-haven demand. Wall Street indexes faced sharp weekly declines amid concerns over AI stock rallies. Traders are now anticipating a potential Federal Reserve interest rate cut in December.

Gold prices rose on Friday as the dollar softened and uncertainty around the U.S. government shutdown added to safe-haven demand, while Wall Street indexes were set for sharp weekly declines.

Spot gold was up 0.7% at $4,005.21 per ounce, as of 3:15 p.m. ET (2015 GMT). U.S. gold futures for December delivery gained 0.5% to settle at $4,009.80 per ounce.

Tech-heavy stock markets remained poised for their biggest weekly fall in seven months on Friday, as investors fretted over the sustainability of a rally in artificial intelligence stocks.

The U.S. dollar eased, making greenback-priced bullion cheaper for other currency holders.

"The recent price action technically suggests we may be putting in a floor underneath gold and silver prices," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold is considered a hedge during uncertainty, and as a non-yielding asset, tends to benefit in low-interest rate environments.

With the U.S. government shutdown delaying the release of the monthly non-farm payrolls report, traders turned to private sector data, which showed job losses in October, to gauge the likelihood of another Federal Reserve interest rate cut this year.

Markets now see a 66% chance of a 25-basis-point rate cut in December, according to CME Group's FedWatch tool.

Meanwhile, China has started designing a new rare earth licensing regime that could speed up shipments, though it is unlikely to fully lift restrictions as Washington had hoped, industry insiders said.

"Even though the waves in trade policy have calmed down somewhat, the conflicts are by no means resolved. Gold is therefore likely to remain in demand as a safe haven," Commerzbank said in a note.

Meanwhile, India's physical gold demand remained subdued as volatile prices deterred buyers and prompted dealers to offer steep discounts.

Elsewhere, spot silver climbed 0.9% to $48.41 per ounce. Platinum rose 0.1% to $1,543.00, and palladium was up 1.5% at $1,395.49. All three logged weekly losses.

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