Gold prices surge over 1% in response to heightened risk aversion and a temporary pause in the U.S. dollar's strength. This surge comes amidst a backdrop of global economic uncertainty and a shift in market sentiment.
Key factors include:
- US Private Jobs Data: The release of US private jobs data at 0815 ET is a significant event, offering insights into the country's employment landscape.
- European Shares: European stock markets hit a two-week low, indicating a broader trend of risk aversion and nervousness among investors.
The article highlights the following:
- Gold's Resilience: Gold prices have demonstrated remarkable resilience, rising over 1% despite a slight pullback in the U.S. dollar and a broader risk-off sentiment. Spot gold reached $3,966.54 per ounce by 1044 GMT, while U.S. gold futures for December delivery climbed to $3,976.10 per ounce.
- Market Concerns: The recent shift towards risk-off sentiment in financial markets is attributed to growing concerns about equity market valuations. This shift has helped stabilize gold prices after they retreated from record highs.
- Economic Indicators: The U.S. government shutdown, approaching the longest ever, has led investors to focus on non-official economic reports, such as the ADP National Employment Report, for clues on the U.S. interest rate path.
- Interest Rate Outlook: The U.S. Federal Reserve's recent rate cut and Chair Jerome Powell's remarks suggest a potential pause in borrowing cost reductions for the year. Market participants now anticipate a 72% chance of a rate cut in December, down from over 90% before Powell's statements.
- Gold's Strength in Low-Interest Rates: Non-yielding gold typically performs well in low-interest-rate environments and during periods of economic uncertainty, making it an attractive investment option.
- Safe-Haven Demand: Julius Baer analyst Carsten Menke notes strong demand for physical gold from safe-haven seekers, including emerging market central banks, further supporting gold's resilience.
