Gold holds five-day rally on Fed cut bets, US shutdown concerns

The precious metal has soared 47% this year, putting it on track for the biggest annual gain since 1979

Gold steadied — following a five-day rally that saw it reach successive records — as the US government shutdown began and traders added to bets on Federal Reserve interest-rate cuts following weak private payrolls data.

Bullion traded near $3,860 an ounce, about $35 below a peak set on Wednesday, with the suspension in federal operations threatening to create a blackout in crucial economic figures that the Fed needs to make rate decisions. That’s left economists, traders and policymakers more reliant on non-government data, like Wednesday’s ADP Research print, which showed a sharp decrease in private-sector payrolls in September.

Non-farm payroll numbers, which were due Friday, will be delayed because of the shutdown — which also risks increasing pressure on the dollar. Traders have added to bets the Fed will cut rates twice more this year to support a weakening labor market. Lower borrowing costs tend to boost non-yielding gold, which also becomes cheaper for most buyers when the greenback softens.

The precious metal has soared 47% this year, putting it on track for the biggest annual gain since 1979. The rally has been supported by central-bank buying and rising holdings in gold-backed exchange-traded funds, as the Federal Reserve resumed interest-rate cuts.

Monthly ETF inflows in September were the largest in three years, according to data compiled by Bloomberg. Chinese buyers were also scooping up more gold-backed funds, with the four most popular registering inflows last month following a period of tepid demand.

Gold has also drawn haven demand amid mounting concerns about the Fed’s independence. On Wednesday, the US Supreme Court refused to allow President Donald Trump to immediately oust Fed Governor Lisa Cook while she sues to keep her job — dealing a setback to his efforts to exert more control over the central bank.

Spot gold edged 0.2% lower to $3,859.22 an ounce at 8:10 a.m. in Singapore, after closing 0.2% higher on Wednesday. The Bloomberg Dollar Spot Index was flat. Silver dipped, after rallying to the highest in 14 years during the previous session. Platinum and palladium declined.