Gold Prices Dip Amid Strong Risk Appetite and Fed Rate Cut Bets

Gold prices slipped in Asian trading on Friday, trimming part of their weekly gains as demand for safe-haven assets weakened in the face of strong risk appetite. Spot gold dropped 0.3% to $3,847.27 per ounce, while December futures held steady at $3,871.12 by 01:06 ET (05:06 GMT). Earlier this week, spot prices touched a record high of $3,897.20 per ounce.

The decline comes as global equity markets remain upbeat, buoyed by optimism surrounding artificial intelligence and expectations of additional U.S. interest rate cuts. Despite concerns over an ongoing U.S. government shutdown, investors largely brushed off potential risks, citing the historically limited impact of such events on financial markets.

Gold has rallied for seven consecutive weeks, gaining 2.2% this week alone, as investors bet on more Federal Reserve easing in 2025. However, enthusiasm for risk-driven assets has capped demand for the yellow metal as a traditional safe haven.

Other precious metals also faced pressure. Spot platinum slipped 0.6% to $1,567.97, while spot silver steadied at $47.00 after advancing 2.3% this week.

Investor focus shifted toward private labor data after the government’s nonfarm payrolls release for September was delayed due to the shutdown. Weak employment indicators bolstered expectations of another 25 basis point Fed rate cut in October, following a similar move in September. CME FedWatch data shows markets pricing in a 99.3% probability of an October cut.

Challenger job cuts and ADP payrolls both signaled continued weakness in the labor market, heightening pressure on the Fed to ease policy further. However, officials remain cautious, with sticky inflation raising doubts about the need for aggressive rate reductions.

With gold prices near record highs and rate cut bets climbing, traders are balancing safe-haven demand against strong equity momentum—setting the stage for volatile moves ahead.