PRECIOUS-Gold hovers near record high on US rate-cut bets, government shutdown

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Gold hit record high of $3,895.09/oz on Wednesday

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US private payrolls decline in September

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Goldman Sachs sees more upside for gold

(Adds comment and updates for Asia midday trade)

By Brijesh Patel

Oct 2 (Reuters) - Gold prices held steady on Thursday, hovering near the record high hit the day before, helped by expectations of further U.S. rate cuts this year and political uncertainty.

Spot gold held its ground at $3,862.07 per ounce, as of 0451 GMT, after hitting an all-time high of $3,895.09 on Wednesday.

U.S. gold futures for December delivery eased 0.3% to $3,887.50.

"Weak ADP employment data ahead of the non-farm payrolls report has revived Fed rate-cut bets to weaken the U.S. dollar. Gold has also been given a bump from the U.S. government shutdown," City Index senior analyst Matt Simpson said.

"Futures market positioning continues to show large speculators and managers funds are chasing the move higher, with their net-long exposure rising but not near an extreme."

Data showed on Wednesday that U.S. private payrolls fell by 32,000 jobs in September after a downwardly revised 3,000 decline in August.

The U.S. government has shut down much of its operations, potentially putting thousands of federal jobs at risk, after partisan divisions prevented Congress and the White House from reaching a funding deal.

The shutdown could delay the release of economic indicators, including the closely watched non-farm payrolls report scheduled for Friday.

Meanwhile, Chicago Fed President Austan Goolsbee said he is starting to get more concerned about inflation, making him want to be "careful" about lowering interest rates.

Traders are pricing in a near-certain 25 basis-point cut to the Fed's key interest rate this month, according to the CME FedWatch tool.

Gold, often used as a safe store of value during times of political and financial uncertainty, thrives in a low interest rate environment.

"The upside risks to our $4,000/oz mid-2026 and $4,300/oz December 2026 gold price forecasts have intensified further due to speculative positioning and large upside surprise to Western ETF holdings," Goldman Sachs said in a note.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.59% from Tuesday to 1,018.89 metric tons on Wednesday, their highest since July 2022.

Elsewhere, spot silver slipped 0.3% to $47.17 per ounce, platinum was steady at $1,558 and palladium gained 1.5% to $1,263.50. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Janane Venkatraman)