Onome Amuge
Gold soared to an all-time high on Wednesday, buoyed by expectations of a near-term shift in US monetary policy after disappointing employment data and the federal government’s shutdown rattled investors.
The precious metal briefly touched $3,895 per ounce before retreating slightly to trade around $3,871, still up more than 0.3 per cent on the day. The move extends a rally that has accelerated as investors increasingly wager on a Federal Reserve rate cut at its October 29 meeting.
Futures markets now imply a 98 per cent probability of a 25 basis-point reduction, with only a 4 per cent chance of rates being held steady. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as bullion, typically providing a tailwind for gold.
The rally came as US Treasury yields slipped, with the benchmark 10-year note dropping nearly five basis points to 4.106 per cent. Real yields, a closely watched driver of bullion prices, were unchanged at 1.796 per cent. The dollar index, which measures the greenback against a basket of six major currencies, edged down 0.11 per cent to 97.68, adding further support to gold.
Labour market data provided the immediate spark. Figures from payroll processor ADP showed US private-sector jobs shrank by 32,000 in September, confounding expectations of a 50,000 gain. It followed a downward revision for August, underlining concerns that hiring momentum is stalling. Separate data from the Bureau of Labor Statistics showed job vacancies rose modestly in August, but the hiring rate fell to 3.2 per cent, its lowest level since mid-2024.
Manufacturing indicators remained weak, with the Institute for Supply Management’s September PMI rising to 49.1 from 48.7, the seventh consecutive month of contraction, though marginally better than forecast.
The backdrop has been complicated by Washington’s budget impasse, which has forced large parts of the federal government to shut down. Analysts warned that the disruption could delay the release of Friday’s nonfarm payrolls report, a key input into Fed policy decisions.
Despite the volatility, technical traders noted the emergence of a “shooting star” pattern on gold’s charts, which could signal short-term resistance. Still, most analysts believe the balance of risks favours further gains.
With central banks globally continuing to diversify reserves into bullion and geopolitical risks lingering, gold’s role as a hedge appears to be strengthening. For investors wary of slowing US growth and political dysfunction, the metal’s record-setting move showcases its status as a safe harbour.
