Bullion jumped nearly 2%, trading above $4,070 an ounce after finishing last week largely unchanged.
The precious metal extended its gains from Friday, following a sharp drop in U.S. consumer sentiment, which fell to near record lows due to the effects of the government shutdown and rising prices. Additionally, a private report signaling weakness in the labor market added to concerns over economic health.
While there is growing optimism that the U.S. government shutdown may soon end after a deal gained support from moderate Senate Democrats, the ongoing suspension of key economic data has left the Federal Reserve navigating uncertain waters. This has led to heightened speculation that the Fed may reduce interest rates next month to address the dual challenge of high inflation and a softening labor market.
Riya Singh, an analyst at Emkay Global Financial Services, noted that weak U.S. labor market signals are reinforcing expectations of a potential rate cut. However, she cautioned that optimism about a resolution to the government shutdown could temper gold’s upward momentum in the near term.
Gold has retreated around 7% since hitting a record high above $4,380 an ounce in mid-October. It’s still up more than half this year, however, and most of the factors that have propelled the blistering rally — heightened economic and geopolitical uncertainties and elevated central bank and retail buying — remain in place.
The People’s Bank of China, a major buyer that’s helped abet the advance, added gold to its reserves for a 12th consecutive month in October, according to data released Friday. Gold-backed exchange-traded funds have also registered net inflows in the past two sessions.
Spot gold rose 1.8% to $4,071.55 an ounce as of 2:27 p.m. in Singapore. The Bloomberg Dollar Spot Index was steady. Silver jumped 2.4%, and platinum and palladium also advanced.
