Will a poor economic outlook and US fiscal follies support gold?
*The Wall Street Journal, by Tatyana Shumsky, October 2, 2013
”Gold futures rose as traders weighed the government shutdown’s impact on upcoming U.S. debt-ceiling talks and the future course of monetary policy.
The most actively traded contract, for December delivery, settled up $34.60, or 2.7%, at $1,320.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
The U.S. federal government closure moved into a second day as Democrats and Republicans remained deadlocked over a budget for the fiscal year, which started on Oct. 1. Some investors are now worried that the shutdown will last longer than expected, leading to terser negotiations over the U.S. debt ceiling in mid-October.
‘Typically, this gets resolved in three to five days, but with the debt ceiling so close the Republicans could dig in,’ said Ira Epstein, director of the Ira Epstein division at the Linn Group.
As a result, gold prices could move higher as worries of a potential U.S. debt default drive some investors to seek the safety of gold, Mr. Epstein said. He added that such gains are likely temporary, and that he has advised clients to sell gold into such rallies.
Gold futures also drew strength from speculation that the furlough of hundreds of thousands of federal government workers, along with slower-than-expected U.S. private hiring, will prompt the Federal Reserve to delay winding down its stimulus efforts.”
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