Gold Rises on Continued US Shutdown

Gold prices are holding moderate gains in early U.S. trading Monday. Some safe-haven demand amid the U.S. government’s partial shutdown is supportive for gold, while the weaker U.S. dollar index is a bullish daily factor for all the precious metals. Short covering in gold and silver markets is also a feature to start the trading week.
December Comex gold was last up $10.10 at $1,319.90 an ounce. Spot gold was last quoted up $8.50 at $1320.25. December Comex silver last traded up $0.253 at $22.00 an ounce.

Asian and European markets were mostly weaker overnight, with U.S. stock indexes solidly lower in early electronic trading Monday, as the partial U.S. government shutdown enters its seventh day with still no end in sight. Now the market place is wondering if and when credit rating agencies will downgrade the U.S. government’s credit rating. Such could accelerate trader and investor anxieties. While there is growing unease in the world market place there is still not yet panic. However, as this situation drags on anxiety will continue to increase, and safe-haven demand for gold could also be ratcheted up. Soon the U.S. government will also hit its debt ceiling. If that important matter cannot be agreed upon by U.S. lawmakers in a timely manner, then it could be a much bigger event for the market place than the current budget impasse.

Russian President Putin and the German Bundesbank on Monday warned that President Obama needs to overcome the U.S. government debt/budget crisis very soon, or else the matter will start to impact other world economies. If risk aversion in the market place continues to increase, the odds will grow that daily price volatility will increase in many markets. Fresh U.S. budget news coming out of Washington Monday could be market-sensitive.

via Kitco

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