Gold prices are trading near a two-week high, currently around $4,130 per ounce. This support stems from increased anticipation of a Federal Reserve rate cut driven by signs of labor market weakness. While an expected end to the US government shutdown could reduce demand for safe-haven assets like gold, the precious metal is still poised for its best annual performance since 1979.
- Gold prices are around $4,130 per ounce.
- Prices are near a two-week high.
- Growing expectations of a Federal Reserve rate cut are supporting prices.
- US companies shed an average of 11,250 jobs per week in the four weeks ending October 25, indicating labor market weakness.
- Traders price in roughly a 68% chance of a 25 bps rate cut next month.
- The US government shutdown is expected to end soon.
- Ending the shutdown may ease economic uncertainty and reduce demand for safe-haven assets.
- Gold remains on track for its strongest annual performance since 1979.
The confluence of factors presented indicates a complex situation for gold. Weaker economic data is fueling speculation of monetary easing, which typically benefits gold. However, the resolution of political gridlock could temper demand as investors become less risk-averse. Despite this potential headwind, current price levels suggest the market views the likelihood of continued economic uncertainty and subsequent rate cuts as a significant driver of gold’s value.