Gold holds losses with US rate-cut outlook muddled by data void

Gold edged down 0.3% to $4,032.42 an ounce as of 8:19 a.m. in Singapore.

Gold steadied, after three days of losses underpinned by fading expectations of a US interest rate cut next month.

Bullion was trading around $4,030 an ounce on Tuesday. With investors and policymakers awaiting a backlog of data after the longest US government shutdown in history, several Federal Reserve officials have cautioned against another reduction in the cost of borrowing.

Interest-rate swaps now imply a less-than-50% likelihood of a December rate cut after all but pricing in a quarter-point reduction less than a month ago. This has dampened the outlook for gold, which doesn’t pay interest and typically benefits from lower rates.

The first clues to the state of the American labor market will appear on Thursday, when the Bureau of Labor Statistics is scheduled to release the September jobs report. The data will be more backward-looking than usual but will help shed light on the state of the world’s largest economy as Washington emerges from its six-week shutdown.

Despite its recent pullback, gold has gained 54% this year and remains on course for its best annual performance since 1979. Investors have bought the metal as a hedge against growing fiscal unease in several major economies, while elevated central-bank purchases also provided crucial support for bullion’s blistering run to a record above $4,380 last month.

These purchases likely continued in November, analysts from Goldman Sachs Group said in a note on Monday. Central banks bought an estimated 64 tons in September, more than triple the amount in August, they said. China alone added an estimated 15 tons.

“We continue to see elevated central-bank gold accumulation as a multiyear trend, as central banks diversify their reserves to hedge geopolitical and financial risks,” said the analysts, including Lina Thomas.

Gold edged down 0.3% to $4,032.42 an ounce as of 8:19 a.m. in Singapore. The Bloomberg Dollar Spot Index was flat. Silver and palladium fell, while platinum rose slightly.