Gold rose on Friday and headed for a seventh weekly advance as the U.S. government shutdown added another layer of uncertainty for investors seeking signals on the

United States Federal Reserve

’s monetary-easing path.

Bullion

held above US$3,880 an ounce, less than US$20 from a record reached on Thursday. The torrid pace of the advance has left gold vulnerable to pullbacks, with technical indicators showing it’s been trading in overbought territory for the past month.

With the U.S. shutdown delaying Friday’s government payroll report, investors have become reliant on private data for crucial clues about an already murky economic outlook. The blackout will also make it harder for central bankers to interpret the economy’s direction, Fed Bank of Chicago President Austan Goolsbee said this week. Money markets are still almost fully pricing a quarter-point cut at the end of the month, and are widely expecting another in December. Lower borrowing costs tend to benefit non-yielding precious metals.

Meanwhile, the Institute for Supply Management’s index of services showed the U.S. service sector stalled in September as business activity shrank for the first time since the pandemic and orders barely expanded.

Gold has soared about 48 per cent this year in a rally that’s seen successive all-time highs, with prices now on track for the biggest annual gain since 1979. The precious metal has been supported by central-bank buying and increasing holdings in gold-backed exchange-traded funds, as the Fed resumed interest-rate cuts.

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Spot gold traded up  0.7 per cent to US$3,884.53 an ounce as of 1:28 p.m. in New York. The Bloomberg Dollar Spot Index fell 0.1 per cent. Silver rose 2.1 per cent to US$47.9655 an ounce, while platinum and palladium also advanced.

With assistance from Preeti Soni and S’thembile Cele

Bloomberg.com