Gold prices hit a record high in Asian trade on Wednesday, crossing $4,000 an ounce for the first time as safe haven demand grew amid heightened political and economic uncertainty.
Bets on more interest rate cuts by the U.S. Federal Reserve also buoyed bullion, with focus turning to upcoming addresses by several officials this week.
Spot gold rose 0.6% to a record high of $4,010.84/oz, while gold futures for December rose 0.7% to a peak of $4,033.27/oz. Gold futures had risen past $4,000/oz on Tuesday.
Gold underpinned by haven demand
Bullion demand was fueled by increased uncertainty over the U.S. economy, as a government shutdown appeared set to enter its second consecutive week.
Political deadlock in Congress, over a government funding bill, showed few signs of clearing despite mediation attempts by President Donald Trump.
While a government shutdown has historically had limited impact on the economy, White House officials warned that this time may be different.
A mounting political crisis in France also spurred risk aversion, especially after Prime Minister Sebastien Lecornu resigned just hours after announcing his cabinet over the weekend.
In Japan, doubts over stretched fiscal spending grew after fiscal dove Sanae Takaichi was elected as the leader of the ruling party. Takaichi is expected to oppose any plans to hike interest rates by the Bank of Japan, and is also expected to dole out more fiscal spending and tax breaks.
Questions grew over just how Takaichi will fund her fiscal agenda, especially amid souring investor sentiment towards Japanese government bonds.
Fed speakers, minutes due this week
The government shutdown delayed the release of several key economic readings, which saw focus shift towards private data, especially on the labor market.
Private readings released last week showed a sustained decline in jobs growth, fueling bets on more rate cuts by the Fed.
The minutes of the Fed’s September meeting are due on Wednesday, offering more insight into the central bank’s decision to cut rates by 25 basis points.
Markets are pricing in a nearly 100% chance for another 25 bps cut later in October, CME Fedwatch showed.
A host of Fed officials are set to speak in the coming days, with Chair Jerome Powell scheduled to speak on Thursday.
Source :
https://www.investing.com/news/commodities-news/gold-prices-hit-record-high-cross-4000oz-amid-political-economic-uncertainty-4276107
