Gold prices near three-week high on rate cut hopes, US shutdown end

Gold prices climbed to their highest level in nearly three weeks on Tuesday, buoyed by growing expectations that the US Federal Reserve will cut interest rates in December and optimism surrounding the end of the US government shutdown.

Spot gold rose 0.7 percent to $4,142.83 per ounce by 0314 GMT, its strongest level since October 24, while US gold futures for December delivery gained 0.7 percent to $4,148.50. The rally extended gains from the previous session, where the metal had already benefited from renewed safe-haven demand.

Markets eye Fed’s next move

Investor sentiment brightened after the US Senate approved a funding bill late Monday to end the longest government shutdown in the country’s history. The move is expected to ease pressure on the economy and allow the release of delayed data, including key reports such as non-farm payrolls, which are closely watched by the Fed.

“The sense that the shutdown is finally ending has removed a major uncertainty,” said Ilya Spivak, head of global macro at Tastylive. “That has allowed markets to refocus on the bigger picture, which is the expectation of easier monetary policy.”

Recent economic indicators have pointed to slowing momentum in the US, with October job losses reported in the government and retail sectors, and consumer sentiment dropping to a three-and-a-half-year low. This has fuelled market bets that the central bank could cut rates by as much as 25 basis points next month, with some officials suggesting an even larger 50-basis-point reduction may be warranted.

Gold, which offers no yield, tends to perform better in low-interest-rate environments as investors seek alternatives to bonds and other interest-bearing assets.

Gold price in Pakistan

In Pakistan, gold prices also moved higher in line with the international market. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold rose by Rs7,400 on Monday to reach Rs429,862 per tola, while 10 grams were sold at Rs368,530 after an increase of Rs6,337.

The international price, as per APGJSA, stood at $4,075 per ounce with a $20 premium, marking a $74 rise during the day. Silver prices in the local market also edged up by Rs115 per tola to settle at Rs5,209.

Elsewhere, spot silver gained 0.5 percent to $50.80 per ounce, platinum rose 0.3 percent to $1,581.60, and palladium advanced 1.2 percent to $1,431.45.

Analysts said gold could continue to edge higher in the near term if the Fed confirms its dovish stance and global growth concerns persist.