Online Reporter
Gold rose for a second day as a weakening US economy increased the chance of a rate cut next month, outweighing progress on ending the government shutdown in Washington. Bullion jumped almost 2 percent to trade above US$4 070 an ounce after finishing last week little changed.
The precious metal built on gains made on Friday as a measure of US consumer sentiment fell to near the lowest on record, with the shutdown and rising prices souring. A private report the day before signalled a weak labour market.
The record-breaking impasse in Washington, meanwhile, appears to be nearing an end after a group of moderate Senate Democrats agreed to support a deal to reopen the government, people familiar with the talks said.
“The suspension of data has meant the Fed has had to fly blind as it tries to balance high inflation and a weak labour market. The weak US labour market signals have reinforced expectations that the Fed may trim rates next month,” said Riya Singh, an analyst at Emkay Global Financial Services in Mumbai.
“However, optimism surrounding a possible resolution to the prolonged US government shutdown could temper gold’s upward momentum.”
Gold has retreated around 7 percent since hitting a record high above US$4 380 an ounce in mid-October. It’s still up more than half this year, however, and most of the factors that have propelled the blistering rally — heightened economic and geopolitical uncertainties and elevated central bank and retail buying — remain in place.
The People’s Bank of China, a major buyer that’s helped abet the advance, added gold to its reserves for a 12th consecutive month in October, according to data released Friday. Gold-backed exchange-traded funds have also registered net inflows in the past two sessions.
Spot gold rose 1,8 percent to US$4 071.55 an ounce as of 2:27 pm. in Singapore. The Bloomberg Dollar Spot Index was steady. Silver jumped 2,4 percent, and platinum and palladium also advanced. — Bloomberg
