Tuesday 19 June 2018

Gold falls as US breaks budget deadlock

Singapore, October 17, 2013

Gold slipped on Thursday, with its safe-haven appeal dimming after US lawmakers passed a
spending bill to avert a historic debt default and end a two-week government shutdown.

But the deal only funds the government until Jan. 15 and increases the debt ceiling until Feb. 7, raising the possibility of another shutdown early next year.

Spot gold had fallen 0.3 per cent to $1,277.71 an ounce by 0630 GMT, with stronger Asian stock markets also dragging.

"Over the next few weeks, markets will tend to be pretty cautious because this is just kicking the can down the road,"  said Victor Thianpiriya, an analyst at ANZ.

"The sentiment for gold is still quite bearish with outflows from exchange traded funds and the risk sentiment pretty weak. It is hard to see reasons why gold will be higher."

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, on Wednesday fell 3.6 tonnes to fresh four-year lows at 885.53 tonnes.

The fund has seen over 400 tonnes in outflows this year, dampening investor sentiment.

Gold has declined about 4 percent since the government shutdown began on October 1, dropping below $1,300 an ounce, as it failed to generate strong safe-haven bids.

Traders said markets had not priced in a default as they always expected the US to come up with a last-minute agreement.

With the passing of the deal, investors will turn their focus to key economic data - which had not been released due to the shutdown - to determine the impact of the impasse on the economy and the Federal Reserve's stimulus measures.

Physical demand continued to remain strong with premiums in India and China rising. The demand for U.S. gold coins surged in October, reversing recent weak sales, boosted by bargain-hunting as prices fell below $1,300 an ounce.-Reuters

Tags: US | Gold |


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