WASHINGTON (dpa-AFX) - Gold prices posted sharp gains on Friday as concerns about the economic impact of a prolonged U.S. government shutdown along with increasing expectations of a U.S. Federal Reserve rate cut boosted demand for the safe-haven metal.
Front Month Comex Gold for October delivery jumped $41.10 (or 1.07%) to $3,880.80 per troy ounce. Gold soared by $104.60 (or 2.77%) per troy ounce for this week. Today's price is a new record close for gold.
Front Month Comex Silver for October delivery skyrocketed by $1.597 (or 3.47%) to $47.597 per troy ounce. Silver surged by $1.3590 (or 2.94%) per troy ounce for this week. Today's price is a new 52-week high for silver.
The U.S. government shutdown enters its third day today, and as a consequence, a large number of federal employees are out of work, resulting in key economic data releases, including critical monthly U.S. payroll figures due to be released today, getting indefinitely delayed.
As things stand, the shutdown could extend beyond this weekend. The delay complicates the U.S. Federal Reserve's decision making.
Private jobs data revealed that the U.S. is facing a hiring stagnation with no significant decrease in unemployment rates.
The ADP report showed that companies shed a seasonally adjusted 32,000 jobs in September.
In addition, the August payrolls underwent a revision showing a loss of 3,000 from an initial increase of 54,000.
Despite the lack of data, markets are pricing in that the U.S. Fed will lower interest rates once again this month.
According to CME Group's FedWatch Tool, investors are betting on a 96.7% chance of a 25-basis-point rate cut at the October 28-29 meeting.
U.S. President Donald Trump is planning for mass layoffs of federal workers. Among the around 750,000 nonessential federal employees furloughed, a large number may not have the chance to be reinstated.
Yesterday, Trump stated that he met the director of the White House Office of Management and Budget to decide which 'Democrat agencies' to close.
According to an Ernst & Young report, each week of shutdown is expected to cost around $7 billion to the U.S. economy
Meanwhile, Russia has accused Ukraine of playing a dangerous game by striking near the Zaporizhzhia nuclear power plant and warned of retaliation. Russian President Vladimir Putin also cautioned the U.S. that their bilateral ties may take a hit if the U.S. supplies Tomahawk missiles to Ukraine.
Nearly 10 European countries accused Russia of drone incursions into their territories, an accusation which Russia has denied.
In the Middle East, militant group Hamas is reviewing the Trump-proposed Gaza peace plan, as a critical component of the peace deal requires disarmament and surrender. Despite Trump's ultimatum, the group has yet to officially respond to the deal.
The yellow metal buying spree by central banks, which accelerated in 2022 (without slowing down through 2025), is projected to go beyond this year. Central banks' gold buying represents around 15% to 20% of annual gold demand.
These sustained purchases have imbibed confidence in gold for private investors.
Demand for gold increases during uncertain political and depressive economic conditions as well as during geopolitical turmoil.
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