Gold prices rise on economic uncertainty; cooling rate cut bets limit upside
Investing.com-- Gold prices rose in Asian trade on Friday as heightened uncertainty over the U.S. economy drove some haven buying, although waning bets on a December interest rate cut by the Federal Reserve limited overall gains.
The yellow metal was also headed for its first weekly gain in four, after handily retaking the $4,000 an ounce level this week. Broader precious metal prices also advanced.
Spot gold rose 0.4% to $4,187.43/oz by 00:24 ET (05:24 GMT), while gold futures for December fell slightly to $4,190.75/oz.
Spot gold was trading up about 5% this week, catching some safe haven bids amid growing uncertainty over the U.S. economic outlook.
A nearly 43 day-long government shutdown ended this week, with the government now expected to resume releasing official economic data in the coming weeks.
But markets fretted over the upcoming data potentially painting a much weaker picture of the economy, especially due to the impact of the shutdown. U.S. government officials on Thursday also suggested that they may never release inflation and labor prints for October due to the shutdown.
Other precious metals also advanced on Friday, and were sitting on strong gains this week. Spot platinum rose 0.5% to $1,593.83/oz, while spot silver rose 1.1% to $52.8815/oz. Silver vastly outpaced other precious metals this week, rallying 9% and coming close to record highs hit in October.
A lack of clear data also leaves the Fed flying blind into its December meeting, with markets sharply paring back bets that the central bank will cut interest rates in December.
“It may take days or even weeks for the federal bureaucracy to fully restart and issue long awaited economic data. Any delays could keep Fed governors relatively cautious,” ANZ analysts wrote, noting recent comments from San Francisco Fed President Mary Daly, that it was too soon to decide on a rate cut.
Markets are now pricing in a 45.4% chance for a 25 basis point cut by the Fed, down sharply from a 64.3% chance seen last week, CME Fedwatch showed.
Bets on a December hold, meanwhile, shot up to a 54.6% chance from a 35.7% probability last week.
The dollar took little support from the lower rate cut bets, as concerns over the U.S. economy largely outweighed support from the prospect steady near-term interest rates. Weakness in the dollar-- which was set to lose about 0.4% this week-- aided metal prices.
