Investors Turn to Gold Amid U.S. Economic Uncertainty
Gold prices climbed on Friday, heading for a seventh straight weekly gain as investor anxiety mounted over the U.S. government shutdown and its ripple effects on Federal Reserve policy decisions. Bullion held above $3,885 per ounce, just $12 shy of its all-time high set on Thursday, signaling continued appetite for safe-haven assets.
The suspension of Friday’s U.S. payrolls report has left investors leaning on private data to gauge the economic outlook. This data vacuum adds to the challenge for central bankers trying to assess the health of the economy. Federal Reserve Bank of Chicago President Austan Goolsbee acknowledged this week that the shutdown could hinder the Fed’s ability to interpret key indicators.
Rate Cuts Support Bullion’s Meteoric Rise
Gold’s rally has been underpinned by strong expectations of monetary easing. Markets are nearly fully pricing in a quarter-point interest rate cut by the end of the month, with another widely expected in December. Lower borrowing costs typically boost demand for non-yielding assets like gold, which offer stability during periods of monetary transition.
So far in 2025, gold has surged around 48%, positioning it for its best yearly performance since 1979. Central bank purchases and rising inflows into gold-backed exchange-traded funds (ETFs) have also helped fuel the rally, along with the Fed’s shift back toward rate cuts.
Overbought Signals Raise Pullback Risks
While the upward momentum in gold remains strong, analysts warn of potential corrections. Technical indicators have shown gold trading in overbought territory for the past month. This suggests the pace of gains may be difficult to sustain in the short term, particularly without fresh economic data or a resolution to the government shutdown.
Still, the broader trend remains bullish, with geopolitical uncertainty, dovish monetary policy, and strong institutional demand providing long-term support for the precious metal.
Metals Market Snapshot
Spot gold traded higher in New York on Friday, while the Bloomberg Dollar Spot Index fell, adding further tailwinds for the metal. Silver rose 2.1% to $47.97 per ounce, while platinum and palladium also saw gains, extending a strong week across the precious metals market.
