Gold held steady near a record high on Thursday (October 2nd), as rising expectations of further US interest rate cuts this year and political uncertainty stemming from the controversial US government shutdown boosted demand for the metal.

Spot gold rose 0.2% to $3,865.73 an ounce at 08:10 GMT, down from Wednesday's all-time high of $3,895.09. US gold futures for December delivery fell 0.2% to $3,890.80. The US dollar index weakened slightly, nearing a one-week low reached on Wednesday.

Data showed on Wednesday that US private sector jobs fell by 32,000 in September after a downwardly revised decline of 3,000 in August. "Overall, the weaker dollar, weak economic data as highlighted in yesterday's ADP report, and the government shutdown continue to attract demand from investors looking to ride the momentum," said Ole Hansen, head of commodity strategy at Saxo Bank.

The US government has shut down most of its operations, potentially jeopardizing thousands of federal jobs and potentially delaying the release of economic indicators, including the key non-farm payrolls (NFP) report due Friday. Traders expect a 25 basis point (bps) interest rate cut this month to be almost certain, according to the CME FedWatch tool.

Gold, seen as a safe haven during times of political and economic uncertainty, thrives in a low-interest rate environment. Gold remains Goldman Sachs' highest-conviction long-term commodity recommendation, the bank said in a note on Wednesday. "Upside risks to our gold price projections of $4,000/oz by mid-2026 and $4,300/oz by December 2026 have increased due to speculative positioning and a large upside surprise in Western ETF holdings," Goldman Sachs added.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.59% from Tuesday to 1,018.89 metric tons on Wednesday, the highest since July 2022. Elsewhere, spot silver rose 0.2% to $47.41 an ounce, platinum rose 1.2% to $1,575.06, and palladium rose 1.7% to $1,265.75. (alg)

Source: Reuters