Gold hovers near record high on US shutdown concerns, Fed rate outlook

Gold prices edged higher on Wednesday, hovering near record levels as the U.S. moved closer to a government shutdown, bolstering safe-haven demand, while weak U.S. labor data reinforced expectations of further Federal Reserve rate cuts.

FUNDAMENTALS

* Spot gold was up 0.2% at $3,861.22 per ounce, as of 0030 GMT. Bullion logged about 12% rise in September, making it the metal’s sharpest monthly rise since August 2011.

* U.S. gold futures for December delivery gained 0.4% to $3,888.80.

* The U.S. Senate failed on Tuesday to pass legislation extending government funding, pushing the nation closer to a shutdown, while U.S. President Donald Trump threatened additional federal workforce cuts.

* A shutdown could delay the release of the closely watched non-farm payrolls report, due on Friday, a key indicator for Federal Reserve policy decisions.

* The JOLTS report on Tuesday indicated marginal growth in U.S. job openings for August, alongside a decline in hiring, signaling softening labor market conditions that may pave the way for further interest rate reductions.

* Economic data has bolstered expectations for Fed rate cuts, with traders pricing in a 97% likelihood of a 25-basis-point cut at October’s meeting and a 76% chance in December, according to CME Group’s FedWatch tool

* Investors are also eyeing the ADP National Employment Report due later on Wednesday for additional labor market insights.

* Gold, a traditional hedge against uncertainty, thrives in a low-interest-rate environment due to its non-yielding nature. The metal has hit multiple record highs this year, with the latest one being $3,871.45, hit on September 30.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.11% to 1,012.88 tons on Tuesday from 1,011.73 tons on Monday.

* Elsewhere, spot silver was steady at $46.64 per ounce, platinum held its ground at $1,573.76 and palladium fell 0.4% to $1,252.25.

DATA/EVENTS (GMT)

0030 Japan S&P Global Mfg PMI Final SA September

0600 UK Nationwide house price mm, yy September

0750 France HCOB Manufacturing PMI September

0755 Germany HCOB Mfg PMI September

0800 EU HCOB Mfg Final PMI September

0830 UK S&P Global Manufacturing Pmi September

0900 EU HICP Flash YY September

0900 EU HICP-X,F,E,A,T Flash MM, YY September

1345 US S&P Global Mfg PMI Final September

1400 US ISM Manufacturing PMI September.