Gold rebounds after shutdown-sparked sell-off . . . . . . . . Gold prices climbed-off two-month lows early Wednesday, after sinking 3.1 percent yesterday, as investors digested the U.S. government shutdown awaiting another political debacle over the debt ceiling. A day earlier, gold gave up more than $40 an ounce to slide to their lowest settlement in almost two months. Concerns over whether the federal shutdown would be short-lived sapped demand for the perceived safe haven. Spot gold inched up 0.42% to $1290.47 per ounce at 07:02 GMT, after falling to as low as $1282.47 an ounce on Tuesday, the lowest level since August 7. On Monday, gold nailed down its first quarterly gain this year. Gold is typically considered a safe-haven asset in times of an uncertain economy and geopolitical tensions. Prolonged political bickering around the US budget had initially prompted some investors to believe gold could go up, but safe-haven bids failed to emerge. The U.S. government began a partial shutdown on Tuesday after Congress failed to agree on a spending bill. President Barack Obama accused Republicans of taking the government hostage in order to sabotage his signature healthcare law. A week-long shutdown would slow U.S. economic growth by about 0.3 percentage points, according to Goldman Sachs, but a longer disruption could weigh on the economy more heavily as furloughed workers scale back personal spending. Some gold traders said the possible impact on the economy and more political drama around raising the U.S. debt ceiling by mid-October could prompt the Federal Reserve to delay the tapering of its bond-buying stimulus, and turn sentiment towards gold more positive. The U.S. has begun using the final extraordinary measures , which will be exhausted no later than Oct. 17, to avoid breaching the nation’s debt limit, Treasury Secretary Jacob J. Lew said in a letter addressed to House Speaker John Boehner. Lew said that there are no other "legal and prudent" options for extending the borrowing authority. But a lot also hinges on seasonal physical demand in China and India towards the end of the year. So far, demand has been muted, dealers said #egyptyard
Posted on: Wed, 02 Oct 2013 10:25:48 +0000
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