Gold Holds Above $1,300 as Investors Weigh Shutdown, StimulusGlenys Sim
Gold held above $1,300 an ounce after gaining the most in two weeks as investors assessed the U.S. government shutdown and its impact on the outlook for monetary stimulus from the U.S. Federal Reserve.
Bullion for immediate delivery fell as much as 0.5 percent to $1,309.47 an ounce, and traded at $1,312.28 at 2:15 p.m. in Singapore. Prices climbed 2.2 percent yesterday, rebounding from an eight-week low of $1,277.15, after a private report showed U.S. companies added fewer workers than forecast in September, supporting the case for the Fed to maintain its $85 billion-a-month of bond buying.
The first government shutdown in 17 years, which IHS Inc. estimates may cost the U.S. at least $300 million a day in lost economic output, extended into a second day yesterday as President Barack Obama refused to negotiate in a meeting with top congressional leaders, said House Speaker John Boehner. Gold dropped 22 percent this year on speculation the U.S. central bank may scale back asset purchases as the economy recovers.
“The market expects a short shutdown that will have a minimal impact on the broader economy and doesn’t change the Fed’s timetable on tapering,” said Mark To, head of research at Wing Fung Financial Group, a Hong Kong-based precious metals trader and refiner. “If the budget standoff stretches into next week, it could begin to negatively impact the economy, and the demand for a safe haven will support gold.”
Gold for December delivery dropped 0.7 percent to $1,311.30 an ounce on the Comex in New York after climbing 2.7 percent yesterday and falling 3.1 percent on Oct. 1. Trading was 57 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Silver for immediate delivery rose and fell at least 0.5 percent, before trading 0.3 percent lower at $21.67 an ounce. Platinum was little changed at $1,387.20 an ounce and palladium lost 0.2 percent to $716.98 an ounce.