Gold still fairly elevated amid US government shutdown
NEW YORK (Scrap Register): Gold is down from last week’s highs but remains fairly elevated with the U.S. government shutdown in its third day, said Mitsubishi.
Gold last week rose for the fifth straight week, with spot metal at one point trading near $1,345 an ounce, which was the highest level since September.
“Gold was supported by a weaker dollar for much of the week on heightened concerns that the U.S. Congress will fail to reach an agreement on government funding, leading to a government shutdown,” Mitsubishi noted.
A shutdown did occur on Saturday. Having priced this in late last week, gold came under light selling pressure as markets reopened but remained fairly elevated, with the potential to rally further if the shutdown goes on for an extended period, leading to a decline in investor confidence in the U.S. growth story and heightened volatility.
However, analysts pointed out, equities remained strong in the U.S. and elsewhere. Strongly performing equities and other risk assets tends to be negative for gold; however, increasingly evidence of hedging of riskier equity and corporate bond trades in gold helps explain why bullion is continuing to hold its own in this ostensibly challenging environment.