Gold holds five-day rally amid bets on Fed interest rate cut and US shutdown

Gold prices steadied on Thursday, hovering around 0.1% higher after a five-day rally that saw it reach successive records. Bullion traded at $3,900 an ounce at the time of writing, about $20 below a peak set on Wednesday.

The precious metal has pushed higher this week as the US government shutdown began, and as traders added to bets that the Federal Reserve will cut interest rates following weak private payrolls data.

Non-farm payroll numbers, which are due on Friday, will now be delayed because of the shutdown, which also risks increasing pressure on the dollar and strengthening gold prices.

Traders have added to bets the Fed will cut rates twice more this year to support a weakening labour market. Lower borrowing costs tend to boost non-yielding gold, which also becomes cheaper for most buyers when the greenback softens.

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The precious metal has rallied almost 50% this year, putting it on track for the biggest annual gain since 1979 — supported by central-bank buying and rising holdings in gold-backed exchange-traded funds.

Monthly ETF inflows in September were the largest in three years, according to data compiled by Bloomberg.

Silver also edged up on the day, after rallying to the highest in 14 years during the previous session, while platinum and palladium likewise rose.

The pound was 0.2% higher against the dollar on Thursday, trading around $1.35 as the US greenback continued to suffer from the government shutdown and downbeat domestic data.

On Wednesday, losses accelerated after September’s ADP employment change plunged from -3,000 to -32,000, against forecasts for a 50,000 increase.

Analysts have pointed out that the dollar may stay on the defensive this week with certain data releases suspended, which include US jobless claims and factory orders.

Sterling rose for the fifth consecutive day, as UK financial services activity steadied after a sharp fall, according to the latest CBI financial services survey overnight. Business volumes declined with a weighted balance of -36%, down from -24% in June.

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Despite the deterioration in activity, sentiment was broadly flat, rising to +3 after a sharp fall of 52% in the previous quarter.

It was also supported by the Bank of England‘s cautious stance on inflation with policymaker Catherine Mann stating that inflation risks are still high despite multiple rate hikes. She said leaving rates unchanged is appropriate until clear signs of easing emerge.

Earlier this week, deputy governor Clare Lombardelli echoed similar views, saying inflation shocks should not be dismissed as temporary.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was muted, down 0.2% to 97.54.

Crude oil futures slipped on Thursday, adding to another three consecutive retreats this week, as geopolitical tensions escalated with the US set to expand Ukraine military aid.

Brent futures lost 0.8%, to $64.86 a barrel while US West Texas Intermediate (WTI) crude also slipped 0.7% to $61.37 a barrel.

The Wall Street Journal reported on Wednesday that the US plans to supply Ukraine with intelligence to aid long-range missile strikes against Russian energy infrastructure.

US president Donald Trump has approved this action, and US officials are encouraging NATO allies to follow suit.

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Meanwhile, OPEC+ might increase oil production by as much as 500,000 barrels per day in November. This potential increase, triple the October adjustment, suggests Saudi Arabia’s intent to regain market share.

The supply increase is likely to coincide with decline in demand patterns in the US and Asia.

The energy market remains volatile, with natural gas and oil forecasts closely tied to global uncertainty and shifting supply dynamics.

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