TSX gains after CPI shows US inflation rose 3%
Investing.com-- Gold prices slipped back from hit fresh record highs Tuesday, after having earlier extended their strong run as markets fretted over a seemingly imminent U.S. government shutdown.
At 08:55 ET (12:55 GMT), Spot gold fell 0.4% to $3,819.07, falling back from a record high of $3,871.72 an ounce, while gold futures slipped 0.2% to $3,847.50. after hitting a peak of $3.893.72/oz.
The yellow metal was sitting on a roughly 17% gain in the third quarter, boosted by persistent bets on more interest rate cuts by the U.S. Federal Reserve.
Additionally, "gold has increased by nearly 45% this year, supported by central bank purchases, the resumption of interest rate cuts, inflows into ETF holdings, and geopolitical tensions," ING said.
Gold upbeat on shutdown risk
Gold saw increased safe haven demand this week amid increasing conviction that U.S. lawmakers will not be able to avert a government shutdown.
Congress has until midnight (04:00 GMT Wednesday) to pass a spending bill and avoid the closure of hundreds of federal institutions.
A Republican-backed spending bill was recently able to clear the House of Representatives, but is now facing resistance in the Senate. Republicans hold a 53-seat majority in the Senate, but require at least 60 votes to approve the spending bill.
Bipartisan talks with President Donald Trump on Monday appeared to have done little to break the political impasse, which is centered around disagreements over healthcare spending and social welfare programs.
Government shutdowns tend to disrupt economic activity in the country, which could present risks to growth. A shutdown this week could also delay the release of closely watched nonfarm payrolls data for September, which is due Friday.
The White House was also seen warning that thousands of government jobs could be axed in the event of a shutdown – a scenario that heralds more weakness in the labor market.
Metal prices head for strong Q3
Beyond gold, broader metal prices eased slightly on Tuesday but were sitting on strong gains in the third quarter amid increasing cheer over lower U.S. interest rates.
The Fed cut rates by 25 basis points earlier this month and signaled potentially two more cuts this year– although this remained contingent on the path of inflation and the labor market.
Several Fed officials offered cautious statements on future rate cuts over the past week. But markets largely retained expectations for at least a 25 basis point cut in October, CME Fedwatch showed.
The prospect of lower rates dented the dollar and buoyed metal prices, with precious metals outperforming in the sector.
Spot platinum was set to add nearly 18% in the third quarter, while spot silver was trading up 30%. Both metals also surged to more-than decade highs on Monday.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.9% to $10,347 a ton, but were up 5% in Q3. COMEX copper futures hovered below $4.9 a pound and were up 11.4% in the third quarter.
Ambar Warrick contributed to this article