Gold set for best week in a month as data gap clouds US outlook

Gold rose 0.4% to $4,187.00 an ounce as of 9:03 a.m. Singapore time.

Gold is on track for its best week in a month, with its appeal reignited by uncertainty around a backlog of official data set to follow the US government’s return from a six-week shutdown.

Bullion was trading at nearly $4,190 an ounce, heading for a weekly gain of around 5% and recouping most of the losses from the previous session. Expectations of another US rate cut — a tailwind for gold, which doesn’t pay interest — lost some steam throughout the week as Federal Reserve officials showed little conviction for reducing the cost of borrowing.

Still, investors are divided on whether a flood of data when Washington returns from its longest-ever shutdown will show enough weakness to justify a rate cut. Gold is up nearly 60% this year and remains on target for its best annual performance since 1979. Central banks have stepped up purchases, seeking a store of value and asset diversification, while investors have piled into the metal as a hedge against growing fiscal unease in some of the world’s biggest economies.

Bullion continues to find support from the prospect of the Fed injecting further liquidity into the financial system. The US central bank “won’t have to wait long” before purchasing assets to sustain desired liquidity levels, Roberto Perli, who runs the System Open Market Account at the Federal Reserve Bank of New York, said this week.

Last month, Fed officials announced they would stop shrinking their balance sheet — which drains liquidity — starting Dec. 1, amid volatility in short-term funding markets.

Gold rose 0.4% to $4,187.00 an ounce as of 9:03 a.m. Singapore time. The Bloomberg Dollar Spot Index was flat. Silver, platinum and palladium all gained.