Gold prices traded within a tight range on Friday, slightly above recent monthly lows as investors assessed the looming risk of a U.S. government shutdown and persistent geopolitical tensions.
by 4:00 pm AEDT (5:00 am GMT) spot gold was just $2.94 or 0.1% higher at $2,597.07.
Safe-haven flows intensified after the U.S. House of Representatives failed to pass a spending bill on Thursday, increasing the likelihood of a partial government shutdown by Friday’s deadline. This, combined with trade war fears and geopolitical uncertainties, bolstered gold's appeal as a safe-haven asset.
A retreat in U.S. Treasury yields also contributed to gold’s support, as the flight to safety tempered the US Dollar’s rally to a two-year high. However, the Federal Reserve's hawkish stance, which signals a slower pace of interest rate cuts in 2025, limited the non-yielding metal’s upside potential.
Despite the supportive backdrop, market participants exercised caution ahead the U.S. Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve's preferred measure of inflation, due later on Friday.
In recent economic data, the U.S. economy expanded at an annualised rate of 3.1% in the third quarter, exceeding earlier estimates of 2.8%, according to the Bureau of Economic Analysis.
Additionally, initial jobless claims fell more than anticipated, dropping to 220,000 for the week ending 14 December.
These data points reinforced the Fed's hawkish outlook and kept a cap on further gold gains.