By Noel John and John Biju
(Reuters) -Gold fell on Tuesday as investors locked in profits after prices hit a fresh record high earlier in the session, while concerns about a potential U.S. government shutdown and hopes for a Federal Reserve rate cut helped limit losses.
Spot gold fell 0.3% to $3,823.79 per ounce as of 09:44 a.m. ET (0723 GMT) after rising 1% to hit a record high of $3,871.45 during Asia hours.
U.S. gold futures for December delivery fell 0.1% to $3,852.40.
“Ultimately, this looks like a reaction to the very strong performance we had in gold. If anything, it’s technical. I don’t see major new drivers. We’re slipping a bit from the peak,” said Bart Melek, head of commodity strategies at TD Securities.
Bullion has risen 11% so far in September, and is on track for its biggest monthly percentage gain since January 2012. It is up 15.9% for the quarter.
Washington braced for a looming government shutdown on Tuesday, with Republicans and Democrats still deadlocked and unlikely to strike a deal before the midnight funding deadline.
“Any shutdown that lasts for a prolonged period is going to have an adverse effect on economic performance in the United States and that encourages easing by the Federal Reserve, which would very likely be a positive for gold,” Melek added.
Non-yielding gold tends to thrive during periods of uncertainty and low interest rate environments.
Markets currently expect a 92.5% chance of an interest rate cut at the Federal Reserve’s October meeting.
The U.S. Labor Department said Monday its statistics agency would halt data releases – including Friday’s closely-watched monthly jobs report – if a partial government shutdown occurs.
Meanwhile, India’s imports of gold and silver nearly doubled in September from August as banks and jewelers rushed to build inventories ahead of festivals and escape higher taxes on imports, sources said.
Elsewhere, spot silver lost 1.7% to $46.14 per ounce but has climbed 16.5% so far this month. Platinum fell 2.9% to $1,554.68 and palladium lost 2.3% to $1,238.37.
(Reporting by Noel John and John Biju in Bengaluru; additional reporting by Kavya Balaraman; Editing by Leroy Leo)
