Mingze Wu | Sep 26, 2013 03:14AM ET
Gold prices rallied strongly during US opening hours yesterday, breaking back into the 1,330 – 1,345 consolidation range. This seems to go against the broader market where Stock prices were depressed due to increased Fed tapering speculation. But the rally isn’t without cause – market is getting jittery about US Government debt ceiling issue, which was once again brought to their attention following the Senate vote to pass a stopgap funding bill to avert a partial Government shut down as early as in 6 days time.
However, it should be noted that the Senate vote went through 100 – 0, highlighting the urgency of the issue and suggesting that both Democrats and Republicans are agreeable that this needs to be resolved. Hence, given this outcome, it is highly unlikely that we will reach an impasse that will result in US defaulting on their current debt. This is perhaps the reason why Treasuries prices are pushing higher and not lower, as market simply doesn’t believe that the US Government will willingly let itself go bankrupt. Nonetheless, this is not stopping Gold traders from thinking this way and sending price up.
Hourly Chart
Weekly Chart
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