Tag Archives: government shut down

Oct 21

Price of Gold Weekly Recap – October 14-18, 2013

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Monday Open: $1,272.70
Weekly High: $1,324.80
Weekly Low: $1,253.50
Friday Close: $1,315.40

The reopening of the U.S. government this week was, perhaps counter-intuitively, good for gold. The end of the partial shutdown on Wednesday supported gold prices, since traders can look forward to Congress revisiting the debt ceiling in a few months, meaning the U.S. economy is nowhere near recovered, and in fact will likely continue the Federal Reserve’s quantitative easing program until there is a more solid foundation underfoot.

Monday opened the week on a high note, rebounding from a drastic sell-off on Friday, which is now being touted by some analysts as market manipulation. The short rally on Monday kicked gold back up from a three-month low.

Tuesday lost some gains to short-term pullback yet gained some momentum because of anticipation of the debt ceiling cut off date, October 17. If the U.S. government would have been unable to reach an agreement about raising the debt ceiling, the country would have defaulted on some loans and had the credit rating downscored.

Luckily, Congress and the Senate were able to pass a budget by Wednesday night, effectively reopening government’s doors by Thursday. The effects of this decision on the price of gold hit full stride Thursday morning as traders rejoined the market. The thinking is that because the two parties still do not see eye to eye, there may be another incident like this in a few months, and the Fed will certainly not be raising interest rates in such an unstable climate. Also, because the government had been on hold for 16 days, no economic reports had been released in that time, so traders are awaiting the state of the economy. The dollar slipped and fell, as well, during all this talk of devaluation, another bullish factor for gold.

By Thursday, some of those gains were lost to short-term traders exiting the market. Friday followed suit and maintained a steady range into the weekend.

Oct 14

Price of Gold Weekly Recap – October 7-11, 2013

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Monday Open: $1,324.50
Weekly High: $1,328.30
Weekly Low: $1,266.70
Friday Close: $1,270.70

Despite the continuation of the U.S. government’s second week of partial shut down, gold did not rally as a safe heaven and instead hit a one-week low. There is a significant amount of anxiety and tension in the marketplace right now over the U.S. government’s inability to pass a budget, and even more tension surrounding the looming debt ceiling negotiations. Analysts say that gold is not acting like a hedge fund because of its bad run the last few months, but if the U.S. defaults on its loans, which is what will happen if a budget is not passed and the debt ceiling ignored, then the U.S. credit ranking will take another hit and the yellow metal will then see more activity.

Monday opened the week fairly stable and continued to operate in a narrow price range into Tuesday. The Republican stronghold and Democratic balking seemed to heighten this week, with each party digging in their heels even more than last. The price of gold did not respond too much to this uncertainty, as there is not yet panic in the marketplace. Russian President Putin and German Bundesbank both warned the U.S. that a continuation of the debt ceiling dilemma will soon start to affect other world economies.

The new Federal Reserve nomination was announced Wednesday, to no one’s surprise. Obama will be aiming to put Janet Yellen in place as the next Chief of the Fed to replace Ben Bernanke in 2014. This is seen as generally bullish for gold, since Yellen, who has served as Vice President of the Fed since 2010, supports quantitative easing programs like Bernanke. However, the news did not move the market.

The end of the week saw prices dip from their general holding pattern. Risk-on attitudes and sell-stops on Friday contributed to the decline. The lack of economic data released in the past week put a halt to a lot of trading, including gold, though Obama and the Republicans seem to be close to signing a six-week long extension on the debt ceiling to pass a budget.

Oct 07

Price of Gold Weekly Recap – September 30-October 4, 2013

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Monday Open: $1,332.00
Weekly High: $1,335.00
Weekly Low: $1,283.30
Friday Close: $1,310.80

The U.S. government shut down was on the forefront of all world markets this week, including gold. Though the shut down does imply some bullish factors for the yellow metal, the volatility of the market proved to be bearish overall.

Monday exhibited a strong holding pattern for gold as the U.S. government hinted at a failure to come to compromise by the first of October. On this last day of the month, Monday, short-term trading held steady, as speculators imagined gold could shoot up as safe haven, or drop down on rampant uncertainties everywhere.

On Tuesday, October 1st, the U.S. government did indeed “shut down,” as lawmakers could not reach a conclusion to pass a budget. House Republicans have brought the Affordable Care Act to the spotlight, as they have purposefully left out funding for the program, which Senate Democrats have refused to pass. With U.S. politicking so volatile, the yellow metal took a turn for the worst on Tuesday. Gold acted more as a commodity than a currency on Tuesday as traders left the market to force gold into a seven-week low.

Wednesday showed some short-term recovery as others entered the gold market on bargain hunting, but no progress was made between the House and the Senate, so the price of gold stayed pretty steady until the end of the week. Economic reports due out Friday were not released since government employees were on furlough.

Thursday and Friday marked the third and fourth days of the U.S. partial government shut down. The price of gold stayed low, and the general feeling in the market place is one of extreme uncertainty, but not quite panic. There are signs that this shut down could be bullish for gold long term, since the drag on the economy may encourage the Federal Reserve to extend its quantitative easing program.