Gold hits record high on US government shutdown, Fed rate cut bets
- Gold hits record high of $3,858.18 an ounce
- US central bank expected to cut interest rates this month
- ADP national employment report due later today
Gold prices hit a record high on Wednesday, supported by safe-haven demand as the U.S. government shut down most operations, while growing expectations of a cut to U.S. interest rates added to the metal's appeal.
Spot gold gained 0.8% to $3,886.97 an ounce by 1055 GMT after touching a record peak of $3,898.18.
U.S. gold futures for December delivery jumped by 1.1% to $3,914.50.
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The dollar weakened against a basket of other leading currencies, making dollar-priced gold more affordable for overseas buyers.
"The dollar is weakening on the back of expectations of an increasingly dovish Fed," said ActivTrades analyst Ricardo Evangelista, referring to the U.S. Federal Reserve.
"This dynamic has accelerated after a failed attempt to pass a spending bill triggered a government shutdown, which could weigh on economic output."
The U.S. government shutdown, triggered by the failure of Congress and the White House to reach a funding deal, could lead to the loss of thousands of federal jobs and could also delay the release of economic data including Friday's non-farm payrolls (NFP) report.
Non-yielding gold, viewed as a safe-haven asset in times of economic and geopolitical uncertainty, thrives when interest rates are low.
"Most likely the Fed doesn't really need the (NFP) report to make up its mind (on a cut to interest rates)," said Julius Baer analyst Carsten Menke, adding that the central bank has room for more monetary easing.
Investors are pricing in a 95% chance of a rate cut this month, the CME FedWatch Tool shows.
The ADP national employment report due later in the day is expected to offer additional labour market insights.
In other precious metals, spot silver gained 1.2% to a more than 14-year high of $47.22 an ounce, platinum rose 0.4% to $1,580.55 and palladium was steady at $1,259.68.
