Gold prices edges higher; strong weekly gains likely

Investing.com -- Gold prices edged higher Friday, with demand for this safe haven remaining strong even as riskier markets posted gains. 

At 09:15 ET (13:15 GMT), spot gold rose 0.5% to $3,877.15 an ounce, and gold futures for December gained 0.9% to $3,902.22/oz.

Spot prices hit a record high of $3,897.20/oz earlier this week.

Optimism over artificial intelligence and more U.S. interest rate cuts kept risk markets largely frothy this week, with Wall Street indexes eking out a series of record highs. While gold also advanced, its gains were cut short by some weakening in haven demand. 

Gold, haven demand hampered by strength in risk assets 

Demand for gold and other safe havens was hampered by persistent appetite for risk-driven assets, with global stock markets logging steady gains this week.

Markets largely brushed off concerns over the immediate impact of a U.S. government shutdown, given that shutdowns in the past have had limited effects on financial markets.

Optimism over lower U.S. interest rates also boosted risk, especially as a series of private readings on the labor market showed sustained weakness.

Markets focused more on private employment data this week, especially as government nonfarm payrolls data for September appeared to be delayed by the shutdown. 

Elsewhere, Spot platinum rose 2.7% to $1,529.45/oz, while spot silver gained 2.7% at 47.605/oz. 

Gold was set to add 2.2% this week in its seventh consecutive week of gains. The yellow metal has been on a tear amid increasing confidence the Federal Reserve will cut interest rates further this year.

Markets largely set on Oct rate cut 

A swathe of weak private labor data this week kept investors largely geared towards an interest rate cut by the Fed in October, after a 25 basis point cut in September.

Markets are pricing in a 99.3% chance the Fed will cut rates by another 25 bps in its end-October meeting, CME Fedwatch showed. 

Expectations for an October cut grew as Challenger job cuts data showed U.S. businesses continued to cut roles in September, albeit at a slower pace than the prior month.

ADP payrolls data showed a sharp deterioration in September. Both readings garnered much more focus than usual due to a delay in official nonfarm payrolls data, which was scheduled for Friday.

The Fed had cited growing labor market risks as the main motivator of its September rate cut. But several officials raised some doubts over whether the central bank needed to cut rates further, especially amid sticky U.S. inflation.  

UBS lifts gold, silver forecasts 

UBS has raised its gold and silver price forecasts again, flagging strong momentum from investor demand, macroeconomic uncertainty, and persistent fiscal and geopolitical pressures.

The bank now expects gold to reach $4,200 an ounce across all timeframes, up from its prior view of $3,800 by end-2025 and $3,900 by mid-2026.

Silver forecasts were lifted to $52 and $55 an ounce, compared with previous targets of $44 and $47.

UBS strategists said the revisions reflect expectations of stronger central bank and exchange-traded fund (ETF) demand, alongside ongoing support from declining real rates and fiscal imbalances.

Ambar Warrick contributed to this article