Gold prices increased in the trading session on Friday, as the USD weakened after the US private sector employment report showed signs of slowing down in the labor market, thereby raising expectations for another interest rate cut by the US Federal Reserve (FED). In addition, the risk of a prolonged US government shutdown has also boosted demand for safe-haven assets such as gold.
Spot gold prices rose 0.7% to $4,005.53/ounce, heading for a 0.1% increase for the week. However, the precious metal has lost 8% of its value since reaching a record $4,381.21/ounce on October 20.
December gold futures in the US increased by 0.3% to $4,004/ounce.
According to data released on Thursday, the US economy lost jobs in October, mainly in the government and retail sectors, while cost cuts and the application of artificial intelligence (AI) in businesses caused the number of announced fires to increase sharply.
Private employment data shows the possibility of the Fed cutting interest rates in December, which is why gold prices are receiving support, said Soni Kumari, commodity strategist at ANZ Bank.
The US dollar depreciated, leading the decline of other major currencies, as investors in the context of a lack of official data on the US labor market have grasped weakness signals from private sector surveys.
A weak job market is often seen as a signal to strengthen the possibility of interest rate cuts. According to CME's FEDWatch tool, investors now have a 67% probability of the Fed cutting interest rates in December, up from about 60% in the previous session. The Fed cut rates last week, and Chairman Jerome Powell hinted that this could be the last rate cut this year.
Currently, the focus of the market is macroeconomic indicators and the end of the US government shutdown crisis, which is continuing to boost safe-haven demand for gold, added Soni Kumari.
The stalemate in the US Congress has led to the longest government shutdown in history, forcing investors and the Fed which rely on economic data to rely on sectors provided by the private sector.
Gold is not profitable, often operating well in low interest rate environments and during periods of economic instability, when investors seek safe assets to preserve value.
For other precious metals, spot silver rose 1.5% to $48.69 an ounce, heading for a 0.1% increase for the week. platinum prices rose 0.6% to $1,550.7/ounce, but are still expected to fall 1.1% for the whole week, while palladium rose 1.6% to $1,397.2/ounce, but is still heading for a 2.4% decline from last week.
