Gold Posts Biggest Weekly Gain in a Month as US Data Delays Fuel Uncertainty

Gold climbed higher on Friday, marking its strongest weekly performance in a month, as traders weighed the impact of a data backlog following the end of the US government's extended shutdown. Silver also moved upward.

The precious metal traded above $4,200 per ounce, locking in a weekly advance of roughly 5% and more than reversing the prior session’s losses. A softening US economic outlook—which has kept alive expectations for another interest rate cut—continued to support gold, a non-yielding asset. Silver, meanwhile, jumped more than 10% over the five-day period, nearing the record high set last month.

This week’s rally may have been amplified by a “gamma squeeze,” a market dynamic where dealers who previously sold low-priced options are compelled to buy gold futures as a hedge. In thin trading conditions, even modest price increases can trigger urgent buying, creating a snowball effect—even without fresh demand from physical buyers.

Daniel Ghali, a strategist at TD Securities, noted in a Thursday report that gold’s rebound fits this pattern. He pointed to a recent drop in over-the-counter trading volumes, which has made the market more susceptible to sharp moves. “This liquidity vacuum may actually have been key for setting up a gamma squeeze, resulting in a second shock wave higher this week,” Ghali said.

Although gold has pulled back from last month’s record high above $4,380, it remains up nearly 60% for the year—on track for its strongest annual gain since 1979. Central banks have accelerated purchases, seeking a reliable store of value and portfolio diversification, while investors continue to turn to gold as a hedge against fiscal risks in several major economies.

Bullion also continues to draw support from expectations that the Federal Reserve will inject more liquidity into the financial system. Roberto Perli, who heads the System Open Market Account at the New York Fed, indicated this week that the central bank “won't have to wait long” before buying assets to maintain adequate liquidity levels.

The Fed had earlier announced it would halt the reduction of its balance sheet—a process that drains liquidity—starting December 1, following volatility in short-term funding markets.

Market participants remain divided, however, on whether a wave of delayed economic data will reveal enough weakness to justify another rate cut. Expectations for a December cut faded as the week progressed, with several Fed officials expressing little urgency to lower borrowing costs. Minneapolis Fed President Neel Kashkari said he was still undecided about next month’s decision, while Cleveland Fed President Beth Hammack favored holding rates steady.

As a result, swap traders lowered the probability of a December rate cut to about 50%, down from over 60% earlier in the week.

As of 11:32 a.m. in Singapore, gold was up 0.9% at $4,209.82 an ounce. The Bloomberg Dollar Spot Index dipped 0.1%. Silver rose 2.3% to $53.50, with platinum and palladium also posting gains.