Gold hit a record high on Wednesday as investors turned to safe-haven assets on growing risks of a US government shutdown, while weak labour data strengthened expectations of further interest rate cuts by the Federal Reserve.
Spot gold rose 0.4% to $3,872.87 per ounce by 0206 GMT. US gold futures for December delivery gained 0.7% to $3,901.40.
The dollar index hovered near a one-week low, making dollar-priced gold more affordable for overseas buyers. [USD/]
Gold is benefiting from "concerns over a weaker dollar, and the political situation with the standoff about a government shutdown in the US and also general geopolitical uncertainty," said Nicholas Frappell, global head of institutional markets at ABC Refinery.
The US Senate failed on Tuesday to pass legislation extending government funding, pushing the country closer to a shutdown, while President Donald Trump threatened additional federal workforce cuts.
The shutdown could delay the release of key economic data, including the non-farm payrolls report on Friday.
The JOLTS report on Tuesday indicated marginal growth in US job openings in August, alongside a decline in hiring, signalling softening labour market conditions.
The report bolstered expectations for Fed rate cuts, with traders pricing in a 97% likelihood of a 25-basis-point reduction this month and a 76% chance in December, according to CME Group's FedWatch tool
The ADP National Employment Report, due later in the day, is expected to provide further insights into the labour market.
"It is difficult to see an immediate end and we are projecting further strength in the near term," Deutsche Bank's precious metals analyst, Michael Hsueh, said, referring to gold' rally.
Gold, a traditional hedge against economic and political uncertainty, thrives in a low interest rate environment due to its non-yielding nature. It has gained more than 47% this year.
Elsewhere, spot silver gained 1.5% to $47.39 per ounce, hitting a more than 14-year high. Platinum rose 1.4% to $1,595.85, while palladium was up 0.9% at $1,267.75.
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