Gold prices rose on Thursday, hitting a more than three-week high, on expectations that the U.S. government reopening would increase debt levels, while delayed economic data could bolster the case for a Federal Reserve rate cut next month.
Spot gold gained 0.7% at $4,227.15 per ounce, as of 0809 GMT, its highest since October 21. U.S. gold futures for December delivery rose 0.4% at $4,232.30 per ounce.
"Precious metals are rallying alongside equities as traders continue to front run dovishness and the resolution of the U.S. government shutdown will not significantly alter the trajectory, as it is expected to contribute to an increase in debt levels," said Hugo Pascal, a precious metals trader at InProved.
"Physical demand for silver and gold remains robust and recent U.S. economic indicators signal weakening growth, a favorable combination for metals prices."
U.S. President Donald Trump on Wednesday signed legislation ending a 43-day government shutdown, the longest in U.S. history, which delayed critical economic data such as jobs and inflation reports.
The agreement funds federal operations through January 30, but the government is projected to add $1.8 trillion annually to its $38 trillion debt burden.
Fed Chair Jerome Powell has cautioned against further easing this year, partly due to a lack of data, while cutting the interest rate by a quarter-point last month.
Economists said the U.S. Labor Department should prioritise November employment and inflation data to ensure Fed officials have up-to-date information at their December policy meeting.
A Reuters poll found that 80% of economists expect the Fed to cut rates by 25 basis points next month.
Lower interest rates typically benefit gold, which offers no yield and is often seen as a safe-haven asset during periods of economic uncertainty.
Gold, up 60% so far this year, reached a record $4,381.21 on October 20, fueled by economic and geopolitical concerns, rising ETF inflows, and expectations of further rate cuts.
Elsewhere, spot silver climbed 1.4% to $54.14 per ounce, moving towards a record high touched on October 17.
Platinum was up 0.1% at $1,616.29 and palladium rose 0.9% to $1,487.50.
Source: Reuters.com
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