Gold set for seventh straight weekly rise

Gold prices rose on Friday, hovering near record highs and heading for a seventh consecutive weekly gain, supported by growing concerns over the economic impact of a prolonged US government shutdown and expectations of interest rate cuts.

Spot gold rose 0.7 percent to $3,884.19 per ounce by 01:40 p.m. ET (1749 GMT), after hitting a record high of $3,896.49 on Thursday. Prices have gained more than 3 percent this week.

US gold futures for December delivery settled over 1 percent higher at $3,908.9 per ounce.

"I think the longer the government stays shut down, that's going to be a steady bullish element for the gold market. If they happen to have a surprise weekend agreement to open the government back up, that would probably be a bearish element," said Jim Wyckoff, senior analyst at Kitco Metals.

The US Senate will vote again on dueling Democratic and Republican plans to end a government shutdown now entering its third day, though there is no sign that either plan will win passage. The key US non-farm payrolls report, originally slated for release on Friday, has been postponed, leaving investors to lean on alternative indicators that point to a cooling labor market and sustain expectations of an imminent rate cut.

Investors are pricing in a 97 percent probability of a 25-basis-point rate reduction in October and a 85 percent likelihood of another similar cut in December, according to CME Group's FedWatch tool.