Uncertainty Surrounding the Fed is Having a Positive Impact on Gold

Gold is heading for a seventh consecutive weekly gain, as the ongoing U.S. government shutdown adds another layer of uncertainty for investors seeking guidance on the Federal Reserve’s future monetary policy.

The precious metal remains near $3,860 per ounce, after a slight dip on Thursday as traders took profits following a five-day rally that pushed prices to a new record earlier in the session. The rapid pace of gains makes gold vulnerable to corrections, with technical indicators showing that trading had been in overbought territory over the past month.

Due to the U.S. government shutdown, Friday’s employment report is expected to be delayed, prompting investors to rely on private data for key insights into an already uncertain economic outlook. Data from consulting firm Challenger, Gray & Christmas on Thursday showed that U.S. employers reduced hiring plans in September while announcing fewer layoffs.

The lack of official data will also make it harder for central bankers to assess the economy’s direction, said Chicago Fed President Austan Goolsbee this week. Financial markets are almost fully pricing in a 25-basis-point rate cut by the end of the month, with another widely expected in December. Lower borrowing costs typically benefit gold, which does not yield income.

Gold has risen over 45% since the start of the year in a rally that produced a series of record highs, with prices now on track for the largest annual gain since 1979. The metal is supported by central bank purchases as well as rising assets in gold-backed ETFs, following the Fed’s resumption of its interest rate-cutting cycle.